Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Information and Contests D16-V1
The process of innovation is driven by two main factors: new inventions and institutions supporting the transformation of inventions into marketable innovations. This paper proposes a new institution, called a semi-public competition, that has been neglected by the economic literature but exists frequently in practice. I show how semi-public competitions can mitigate a dilemma that arises at an early stage of innovative activity and specify the conditions under which a semi-public competition can increase welfare. The results suggest that governments promote knowledge about the semi-public competition mechanism but refrain from direct public funding of competitions.
Innovation Organized Competitions Entrepreneurs Institutional Design Business Plan Competitions Auctions