Grants and prizes might increase innovation, but it won’t increase development, commercialization, or application – which matters more
Daniel F. Spulber, 2021 - Elinor Hobbs Distinguished Professor of International Business and Professor of Strategy at the Kellogg School of Management at Northwestern. The Case For Patents, https://www.worldscientific.com/doi/pdf/10.1142/9789811225666_0001 //DH
Patents provide incentives for efficient invention and innovation because ownership is transferable. Competition among potential adopters helps the market for innovative control allocate patented inventions to the highest-value users. Patent owners have incentives to transfer their IP when others can increase its market value.
The market for innovative control provides valuable guidance for investment in invention and innovation. The market for innovative control determines the returns to invention, commercialization, and innovation. What matters are innovations — that is, the outputs of development, commercialization, and application of inventions — rather than the level of inventive and innovative efforts — that is, the inputs of R&D and the innovative process. Simply subsidizing invention or rewarding inventive efforts could produce more efforts, but not necessarily better inventions and innovations. Government subsidies or rewards for invention in the absence of IP protections would not provide incentives for development, commercialization, or application of inventions, which are essential for diffusion of technology and innovation.