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Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework


  • Brennan, Timothy J.

    () (Resources for the Future)

  • Macauley, Molly

    () (Resources for the Future)

  • Whitefoot, Kate


Policy 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.

Suggested Citation

  • Brennan, Timothy J. & Macauley, Molly & Whitefoot, Kate, 2011. "Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework," Discussion Papers dp-11-21-rev, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-11-21-rev

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    References listed on IDEAS

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    5. Penin, Julien, 2005. "Patents versus ex post rewards: A new look," Research Policy, Elsevier, vol. 34(5), pages 641-656, June.
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    7. Tirole, Jean & Weyl, Glen, 2010. "Materialistic Genius and Market Power: Uncovering the best innovations," IDEI Working Papers 629, Institut d'Économie Industrielle (IDEI), Toulouse.
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    14. Wright, Brian Davern, 1983. "The Economics of Invention Incentives: Patents, Prizes, and Research Contracts," American Economic Review, American Economic Association, vol. 73(4), pages 691-707, September.
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    Cited by:

    1. Salant, Stephen & Seegert, Nathan, 2014. "Private Access Fees and Congestion Is There a Role for Government After All?," Discussion Papers dp-14-26, Resources For the Future.
    2. Isabelle Liotard & Valérie Revest, 2014. "Web 2.0 et Open Innovation : un regain d'intérêt pour les concours d'innovation en ligne," Post-Print hal-01141037, HAL.

    More about this item


    prizes; procurement; contracts; patents; public sector; technological change; innovation; productivity;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; 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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