Working Paper: NBER ID: w21375
Authors: B. Zorina Khan
Abstract: Prizes for innovations are currently experiencing a renaissance, following their marked decline during the nineteenth century. However, Daguerre’s “patent buyout,” the longitude prize, inducement prizes for butter substitutes and billiard balls, the activities of the Royal Society of Arts and other “encouragement” institutions, all comprise historically inaccurate and potentially misleading case studies. Daguerre, for instance, never obtained a patent in France and, instead, lobbied for government support in a classic example of rent-seeking. This paper surveys empirical research using more representative samples drawn from Britain, France, and the United States, including “great inventors” and their ordinary counterparts, and prizes at industrial exhibitions. The results suggest that administered systems of rewards to innovators suffered from a number of disadvantages in design and practice, some of which might be inherent to their non-market orientation. These findings in part explain why innovation prizes lost favour as a technology policy instrument in both the United States and Europe in the period of industrialization and economic growth.
Keywords: innovation prizes; technology policy; historical perspective; intellectual property
JEL Codes: N80; O30; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| design flaws of administered systems of rewards (M52) | ineffectiveness in promoting innovation (O36) |
| failure of the Longitude Prize to produce a winner (Y70) | competition and long time frame for reward (L21) |
| social standing of inventors (O35) | likelihood of receiving awards (I24) |