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Inducement Prizes and Innovation

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  • Brunt, Liam
  • Lerner, Josh
  • Nicholas, Tom

Abstract

We examine prizes as an inducement for innovation using a novel dataset of awards for inventiveness offered by the Royal Agricultural Society of England from 1839 to 1939. At annual shows the RASE held competitive trials and awarded medals and monetary prizes (exceeding one million pounds in current prices) to spur technological development. We find large effects of the prizes on contest entries, especially for the Society’s gold medal. Matching award and patent data, we also detect large effects of the prizes on the quality of contemporaneous inventions. These results hold even during the period when prize categories were determined by a strict rotation scheme, thus overcoming the potential confounding effect that awards may have targeted "hot" technology sectors. Our evidence suggests that prize awards can be a powerful mechanism for encouraging competition and that prestigious non-pecuniary prizes can be a particularly effective inducement for innovation.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6917.

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Date of creation: Jul 2008
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Handle: RePEc:cpr:ceprdp:6917

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Keywords: awards; contests; patents;

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References

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  1. Steven Shavell & Tanguy van Ypersele, 1999. "Rewards versus Intellectual Property Rights," NBER Working Papers 6956, National Bureau of Economic Research, Inc.
  2. Petra Moser, 2007. "Why Don't Inventors Patent?," NBER Working Papers 13294, National Bureau of Economic Research, Inc.
  3. Antras, Pol & Voth, Hans-Joachim, 2003. "Factor prices and productivity growth during the British industrial revolution," Explorations in Economic History, Elsevier, Elsevier, vol. 40(1), pages 52-77, January.
  4. Nicholas Crafts, 2004. "Steam as a general purpose technology: A growth accounting perspective," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(495), pages 338-351, 04.
  5. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
  6. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  7. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  8. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, vol. 95(4), pages 1214-1236, September.
  9. Kremer, Michael R., 1998. "Patent Buyouts: A Mechanism for Encouraging Innovation," Scholarly Articles 3693705, Harvard University Department of Economics.
  10. Lanjouw, Jean O & Pakes, Ariel & Putnam, Jonathan, 1998. "How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 405-32, December.
  11. Michael Kremer, 1998. "Patent Buyouts: A Mechanism For Encouraging Innovation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1137-1167, November.
  12. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
  13. Richard Blundell & Rachel Griffith & Frank Windmeijer, 1999. "Individual effects and dynamics in count data models," IFS Working Papers, Institute for Fiscal Studies W99/03, Institute for Fiscal Studies.
  14. repec:fth:harver:1473 is not listed on IDEAS
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. In Antitrust We (Do Not) Trust
    by Chris Colvin in NEP-HIS blog on 2012-07-17 17:44:37
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Cited by:
  1. Masters, William A. & Delbecq, Benoit, 2008. "Accelerating innovation with prize rewards: History and typology of technology prizes and a new contest design for innovation in African agriculture," IFPRI discussion papers 835, International Food Policy Research Institute (IFPRI).
  2. Nicholas, Tom, 2011. "Cheaper patents," Research Policy, Elsevier, vol. 40(2), pages 325-339, March.
  3. Murray, Fiona & Stern, Scott & Campbell, Georgina & MacCormack, Alan, 2012. "Grand Innovation Prizes: A theoretical, normative, and empirical evaluation," Research Policy, Elsevier, vol. 41(10), pages 1779-1792.

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