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Inducement Prizes and Innovation

NHH Dept. of Economics Discussion Paper No. 25/2011

52 Pages Posted: 15 Dec 2011

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

Multiple version iconThere are 3 versions of this paper

Date Written: December 1, 2011

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

JEL Classification: O31, O30, N40

Suggested Citation

Brunt, Liam and Lerner, Josh and Nicholas, Tom, Inducement Prizes and Innovation (December 1, 2011). NHH Dept. of Economics Discussion Paper No. 25/2011, Available at SSRN: https://ssrn.com/abstract=1972290 or http://dx.doi.org/10.2139/ssrn.1972290

Liam Brunt (Contact Author)

NHH - Norwegian School of Economics ( email )

Department of Economics
Helleveien 30
N-5035 Bergen, Hordaland
Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Josh Lerner

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)

HOME PAGE: http://www.people.hbs.edu/jlerner/

Harvard University - Entrepreneurial Management Unit

Cambridge, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tom Nicholas

Harvard University - Entrepreneurial Management Unit ( email )

Cambridge, MA 02163
United States

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