Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework
AbstractPolicy and entrepreneurial communities are increasingly promoting innovation by using prizes but their distinguishing features remain inadequately understood. Models of patents treat winning a patent as winning a prize; other models distinguish prizes primarily as public lump-sum (re)purchase of a patent. We examine advantages of prizes based on the ability to customize rewards, manage competition, generate publicity, and cover achievements otherwise not patentable. We compare prizes to patents using a model based first on whether the procuring party knows its needs and technology, its needs but not its technology, or neither. The second factor is the risk that the investment in research will prove profitable, where the greater the risk, the more the procuring party should share in it through ex ante cost coverage or payment commitment. The model suggests a framework that may be extended to cover other means of technology inducement, including grants, customized procurement, and off-the-shelf purchase.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-11-21-rev.
Date of creation: 27 May 2011
Date of revision:
prizes; procurement; contracts; patents; public sector; technological change; innovation; productivity;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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