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

Timothy Brennan, Molly Macauley and Kate Whitefoot

RFF Working Paper Series from Resources for the Future

Abstract: 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.

Keywords: prizes; procurement; contracts; patents; public sector; technological change; innovation; productivity (search for similar items in EconPapers)
JEL-codes: D21 H41 O31 (search for similar items in EconPapers)
Date: 2011-05-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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