IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v32y2006i1p83-95.html
   My bibliography  Save this article

Firm Incentives for Invention Prizes with Multiple Winners

Author

Listed:
  • S. Keith Berry

    () (Hendrix College)

Abstract

This paper considers several multiple winner models where firms compete for invention prizes determined by the social planner. The short-run model, with a fixed number of firms, can result in negative expected societal benefit where welfare gains are totally dissipated. In the long-run model, with entry and exit, it is demonstrated that there is always a positive net welfare gain. The final model developed is one where the social planner sets the prize and the number of firms. Under certain conditions that model results in smaller total research expenditures than in the long-run model.

Suggested Citation

  • S. Keith Berry, 2006. "Firm Incentives for Invention Prizes with Multiple Winners," Eastern Economic Journal, Eastern Economic Association, vol. 32(1), pages 83-95, Winter.
  • Handle: RePEc:eej:eeconj:v:32:y:2006:i:1:p:83-95
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume32/V32N1P83_95.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
    2. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
    3. Rosen, Sherwin, 1986. "Prizes and Incentives in Elimination Tournaments," American Economic Review, American Economic Association, vol. 76(4), pages 701-715, September.
    4. de Laat, Eric A. A., 1997. "Patents or prizes: Monopolistic R&D and asymmetric information," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 369-390, May.
    5. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-962, July.
    6. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
    7. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
    8. Taylor, Curtis R, 1995. "Digging for Golden Carrots: An Analysis of Research Tournaments," American Economic Review, American Economic Association, vol. 85(4), pages 872-890, September.
    9. O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
    10. Rogerson, William P, 1989. "Profit Regulation of Defense Contractors and Prizes for Innovation," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1284-1305, December.
    11. Lazear, Edward P, 1997. "Incentives in Basic Research," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 167-197, January.
    12. Baik, Kyung Hwan, 1993. "Effort levels in contests : The public-good prize case," Economics Letters, Elsevier, vol. 41(4), pages 363-367.
    13. William Corcoran, 1984. "Long-run equilibrium and total expenditures in rent-seeking," Public Choice, Springer, vol. 43(1), pages 89-94, January.
    14. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-143, January.
    15. Wenders, John T, 1987. "On Perfect Rent Dissipation," American Economic Review, American Economic Association, vol. 77(3), pages 456-459, June.
    16. Berry, S Keith, 1993. "Rent-Seeking with Multiple Winners," Public Choice, Springer, vol. 77(2), pages 437-443, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:32:y:2006:i:1:p:83-95. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross). General contact details of provider: http://edirc.repec.org/data/eeaa1ea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.