I am a big fan of technology-inducement prizes. The prospect of substantial rewards is a major driver for innovation and invention. Indeed, this is how the patent system works: Successful inventors are rewarded with a temporary monopoly (which allows them to obtain monopoly rents, i.e. economic returns greater than they would get in a competitive market). Prizes can provide a similar incentive structure and thus can be particularly valuable in contexts (such as with the atmospheric commons) where patents are insufficient to generate the super-competitive returns.
Prizes can also help spur innovation when it is needed due to exigent circumstances such as with, say, a pandemic.
At Marginal Revolution, Tyler Cowen has announced that the Emergent Ventures Project of the Mercatus Center has raised money to fund over $1 million in prizes for coronovirus-related accomplishments. From his post:
I believe that we should be using prizes to help innovate and combat the coronavirus. When are prizes better than grants? The case for prizes is stronger when you don’t know who is likely to make the breakthrough, you value the final output more than the process, there is an urgency to solutions (talent development is too slow), success is relatively easy to define, and efforts and investments are likely to be undercompensated. All of these apply to the threat from the coronavirus. . . .
Anyone in the world could make a contribution to the anti-virus effort and it won’t work to just give a chunk of money to say Harvard or MIT. . . .
I therefore am grateful that I have been able to raise a new chunk of money for Emergent Ventures — a project of the Mercatus Center — for ex post prizes (not grants) for those who make progress in coronavirus problems.
Here are the newly established prizes on offer:
1. Best investigative journalism on coronavirus — 50k
2. Best blog or social media tracking/analysis of the virus — 100k
3. Best (justified) coronavirus policy writing — 50k
4. Best effort to find a good treatment rapidly — 500k, second prize 200k
5. Best innovation in social distancing — 100k
6. Most important innovation or improvement for India — 100k
What might be an example of a winning project? What if this attempt to build scalable respirators succeeded? That would be a natural winner. Or a social distancing innovation might be the roll out of more meals on wheels, little libraries, online worship, easier ways to work from home, and so on. . . .
Cowen has also noted that, if funding is available, he would like to be able to offer additional prizes in this area.
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