Prizes versus Contracts as Incentives for Innovation

• 成果类型: Article
• 署名作者: Che, Yeon-Koo; Iossa, Elisabetta; Rey, Patrick
• 署名单位: Columbia University; University of Rome Tor Vergata; Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdaa092
• 发表日期: 2021
• 页码: 2149-2178
• 关键词: Relational contracts; procurement auctions; public procurement; INVESTMENT; DESIGN; implementation

摘要

Procuring an innovation involves motivating a research effort to generate a new idea and then implementing that idea efficiently. If research efforts are unverifiable and implementation costs are private information, a trade-off arises between the two objectives. The optimal mechanism resolves the trade-off via two instruments: a cash prize and a follow-on contract. It primarily uses the latter, by favouring the innovator at the implementation stage when the value of the innovation is above a certain threshold and handicapping the innovator when the value of the innovation is below that threshold. A cash prize is employed as a supplementary incentive only when the value of innovation is sufficiently high. These features are consistent with current practices in the procurement of innovation and the management of unsolicited proposals.