Promoting demand-side innovation: prizes for payers

Promoting healthcare innovation on the demand side

Innovation policy often focuses on fortifying the incentives of firms that develop and sell new products by offering them lucrative rights to exclude competitors from the market. Regulators also rely on these same firms-and on similar incentives-to develop information about the effects of their products in patients, despite their obvious conflict of interest. The result may be a distorted under...

Prizes for Technological Innovation

Science, technology, and innovation are essential to America’s continued economic growth, and can help achieve a wide range of national and global policy objectives. One currently underutilized tool for stimulating technological innovation is inducement prizes, which encourage efforts by contestants to accomplish a particular goal. A related policy instrument is an Advanced Market Commitment, u...

Inducement Prizes and Innovation

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 rota...

Incentives , prizes , and innovation

Innovation Inducement Prizes: Connecting Research to Policy

Innovation inducement prizes have been used for centuries. In the U.S., a recent federal policy change—the America COMPETES Reauthorization Act of 2010—clarified and simplified a path by which all federal agencies can offer innovation inducement prizes, thus intensifying interest in how government agencies can most effectively design and apply such prizes. This paper aims to review and synthesi...