Inducement Prizes and Innovation
NHH - Norwegian School of Economics; Centre for Economic Policy Research (CEPR)
Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)
Harvard University - Entrepreneurial Management Unit
December 1, 2011
NHH Dept. of Economics Discussion Paper No. 25/2011
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.
Number of Pages in PDF File: 52
Keywords: Awards, Patents, Contests
JEL Classification: O31, O30, N40working papers series
Date posted: December 15, 2011
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