Abstract:
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 invention. 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 because efforts are often of divergent strategies which 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 in a government
framework and employ information markets and truth-bonding to combat rent seeking.
