Inducement Prizes and Innovation

Brunt, Liam; Lerner, Josh; Nicholas, Tom

doi:10.1111/joie.12002

Inducement Prizes and Innovation

The Journal of Industrial Economics, Vol. 60, Issue 4, pp. 657-696, 2012

40 Pages Posted: 23 Dec 2012

See all articles by Liam Brunt

Liam Brunt

NHH - Norwegian School of Economics; Centre for Economic Policy Research (CEPR)

Josh Lerner

Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

Tom Nicholas

Harvard University - Entrepreneurial Management Unit

There are 3 versions of this paper

Date Written: December 2012

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 on 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.

Suggested Citation: Suggested Citation

Brunt, Liam and Lerner, Josh and Nicholas, Tom, Inducement Prizes and Innovation (December 2012). The Journal of Industrial Economics, Vol. 60, Issue 4, pp. 657-696, 2012, Available at SSRN: https://ssrn.com/abstract=2193192 or http://dx.doi.org/10.1111/joie.12002