Needed: Prize For Best Use Of Prizes To Spur Innovation

from the everybody-wins dept

Mon, May 8th 2006 8:10am — Joseph Weisenthal

Using prizes to spur innovation continues to gain in popularity. Two new contests, one to promote fuel efficiency and another to develop a new lunar lander, are in the works from the X-Prize Foundation, which previously had sponsored a contest for private space travel. The model is intriguing because it promotes competition, while spreading the R&D costs among several different organizations, each with a lot at stake. However, the use of prizes is not without its detractors. Some point out that there's already a prize called profit for people who develop technology. That's sometimes true, but there's often a disconnect between the ability to innovate and the ability to execute and turn a profit; perhaps if these inventors can be rewarded with monetary prizes, there will be no need for the patent-and-sue strategy. A deeper problem may be the fact that technology often develops in completely unexpected ways, creating its own demand. Economists know this as Say's Law. The most impressive innovations probably won't come from the heads of contest organizers, but from researchers pursuing their own interests. Still, as long as there's going to be research driven by the public interest (sponsored by governments and other non-profit interests), having researchers compete is a promising model.

6 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Adam Brown, 8 May 2006 @ 9:11am

Overlooking one other thing
I think that a lot of what makes these competitions work is that there is a winner. Competitive behavior drives man to create many things and taste of victory is just as important as the financial reward. These competitions also have the benefit of great public relations. Sure, a company could come up with something amazing on their own but if they do it for a competition and win they get lots of extra press for it.
[ link to this | view in chronology ]
dorpus, 8 May 2006 @ 10:10am

Should winners be killed?
Will the internet spawn innovative serial killers who target very specific kinds of people? I imagine bird watchers would be easy to off in the woods, kite flyers could
be decapitated with kite lines, scrabble players could be asphyxiated with scrabble pieces, bridge players could be lying dead in the cardinal directions, stamp collectors could have their faces glued on to albums, fishermen could be gutted, paintballers could be shot with real guns, yachters could have their skin flapping in the wind, chess players could be blown up with time-bomb chess clocks, Techdirt readers... er, we won't go there. ;P
[ link to this | view in chronology ]
Jim Harper, 8 May 2006 @ 10:17am

Paying for Prizes
When the USG puts up the money for a prize, Americans pay twice: once as taxpayers and a second time as consumers. According to WashingtonWatch.com The H-Prize costs the average family 35 cents - a small price, until you realize the hundreds of other projects that taxpayers are funding.
[ link to this | view in chronology ]
- Joe, 8 May 2006 @ 10:28am
  
  Re: Paying for Prizes
  Jim,
  We're in agreement that the government funds all kinds of wasteful projects (some are research, some are just pure pork). But as long as the government is going to be involved in directing research at all (the wisdom of which can be debated), it seems like a good thing that it's moving more towards the prize model, as opposed to the grants model.
  [ link to this | view in chronology ]
  - Jim Harper, 8 May 2006 @ 10:38am
    
    Re: Re: Paying for Prizes
    Agreed. And, hey, putting the H-Prize in a free-standing bill at least allows for a little transparency and debate on all these topics.
    [ link to this | view in chronology ]
Joe Smith, 8 May 2006 @ 4:25pm

Between the stools
Prizes or direct government research may be appropriate for those challenges where an inventor cannot patent and capture the value of his invention either because the idea cannot be patented at all or any patent cannot be enforced because it can be directly implemented by users.
[ link to this | view in chronology ]