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Experimental evidence on the effects of innovation contests

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  • Brüggemann, Julia
  • Meub, Lukas

Abstract

Economic research on innovation has long discussed which policy instruments best foster innovativeness in individuals and organizations. One of the instruments easily accessible to policy-makers is innovation contests; however, there is ambiguous empirical evidence concerning how such contests should be designed. Our experimental study provides evidence by analyzing the effects of two different innovation contests on subjects’ innovativeness: a prize for the cumulative innovativeness and a prize for the best innovation. We implement a creative real effort task simulating a sequential innovation process, whereby subjects determine royalty fees for their created products, which also serve as a measure of cooperation. We find that both contest conditions reduce the willingness to cooperate between subjects compared to a benchmark condition without an innovation contest. While both contests have similar effects, the most sophisticated innovation is significantly more valuable when there is a prize for the best innovation. However, the total innovation activity is not influenced by introducing innovation contest schemes. From a policy perspective, the implementation of state-subsidized innovation contests in addition to the existing intellectual property rights system should be questioned.

Suggested Citation

  • Brüggemann, Julia & Meub, Lukas, 2017. "Experimental evidence on the effects of innovation contests," Information Economics and Policy, Elsevier, vol. 39(C), pages 72-83.
    • Handle: RePEc:eee:iepoli:v:39:y:2017:i:c:p:72-83
    DOI: 10.1016/j.infoecopol.2017.03.001
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    More about this item

    Keywords

    Innovation prizes; Competition; Laboratory experiment; Real effort task; Creativity; Innovation policy;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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