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Inducement Prizes and Innovation

Author

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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.

Suggested Citation

  • Brunt, Liam & Lerner, Josh & Nicholas, Tom, 2008. "Inducement Prizes and Innovation," CEPR Discussion Papers 6917, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6917
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    References listed on IDEAS

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    Blog mentions

    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 22:44:37

    Citations

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    Cited by:

    1. 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.
    2. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, Elsevier.
    3. Nicholas, Tom, 2011. "Cheaper patents," Research Policy, Elsevier, vol. 40(2), pages 325-339, March.
    4. 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).

    More about this item

    Keywords

    awards; contests; patents;

    JEL classification:

    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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