Carow Hall, Conference Room
April 26, 2011, 06:00 AM to 07:00 AM
While patents encourage inventors to develop new technology by providing them with a monopoly on their invention, that same monopoly hampers the development of downstream innovation. A technology prize—a cash award to the first to complete a predetermined technological problem—preserves the incentive to invent without hampering future inventions. This dissertation makes the case for technology prizes in three parts. First, I argue that concerns over replicating inventing efforts are an overestimated danger as divergent strategies create knowledge spillovers. I then empirically demonstrate that defensive patenting is a real concern: the more technology workers within an industry change jobs, the more likely firms will patent their trade secrets and clog the patent system with lesser quality inventions. I end with describing how a prize system would work as a government institution and employ information markets and truth-bonding techniques to combat rent seeking.