Inducement Prizes and Innovation

Josh Lerner, Liam Brunt and Tom Nicholas

No 6917, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine prizes as an inducement for innovation using a novel dataset of awards for inventiveness offered by the Royal Agricultural Society of England from 1839 to 1939. At annual shows the RASE held competitive trials and awarded medals and monetary prizes (exceeding one million pounds in current prices) to spur technological development. We find large effects of the prizes on contest entries, especially for the Society?s gold medal. Matching award and patent data, we also detect large effects of the prizes on the quality of contemporaneous inventions. These results hold even during the period when prize categories were determined by a strict rotation scheme, thus overcoming the potential confounding effect that awards may have targeted "hot" technology sectors. Our evidence suggests that prize awards can be a powerful mechanism for encouraging competition and that prestigious non-pecuniary prizes can be a particularly effective inducement for innovation.

Keywords: Awards; Contests; Patents (search for similar items in EconPapers)
JEL-codes: N40 O30 O31 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-ino, nep-ipr and nep-pr~
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Inducement Prizes and Innovation (2012)
Working Paper: Inducement Prizes and Innovation (2011)
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