Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)
Inducement Prizes and Innovation.
(), Josh Lerner and Tom Nicholas
Abstract: We examine the effect of prizes on innovation using data
on awards for technological development offered by the Royal Agricultural
Society of England at annual competitions between 1839 and 1939. We find
large effects of the prizes on competitive entry and we also detect an
impact of the prizes on the quality of contemporaneous patents, especially
when prize categories were set by a strict rotation scheme, thereby
mitigating the potentially confounding effect that they targeted only “hot”
technology sectors. Prizes encouraged competition and medals were more
important than monetary awards. The boost to innovation we observe cannot
be explained by the re-direction of existing inventive activity.
Keywords: Awards; Patents; Contests.; (follow links to similar papers)
JEL-Codes: N40; O30; O31; (follow links to similar papers)
45 pages, December 15, 2011
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