Grants or prizes are superior to patents in determining the social value of innovation
Buccafusco, Christopher and Weinstein, Samuel N. (2024) - Christopher Buccafusco is the Edward & Ellen Schwarzman Distinguished Professor at Duke University School of Law. Samuel N. Weinstein is a Professor and Co-Director of the Heyman Center on Corporate Governance at the Benjamin N. Cardozo School of Law, Yeshiva University "Antisocial Innovation," Georgia Law Review: Vol. 58: No. 2, Article 4. Available at: https://digitalcommons.law.uga.edu/glr/vol58/iss2/4
Scholars have debated the relative efficacy of these innovation incentives, especially prizes and patents. These debates focus mainly on the “who decides” question: is government or the private sector better situated to determine how research dollars should be spent?111 Underlying this debate is the assumption that the private sector typically has an informational advantage over government when it comes to understanding what consumers want.112 Where that assumption holds, patents and tax incentives are likely superior to prizes and grants in efficiently dispersing research funds. As Hemel and Ouelette argue, “[g]overnment-set rewards are inefficient when the government cannot foresee a potential invention or evaluate its costs and benefits.”113 But there are many settings where the social value of an invention outstrips its market value. Private actors are unlikely to invest in inventions that they do not expect to be profitable (or that they expect to be less profitable than other potential investments) regardless of their beneficial
social impact.114 In these circumstances, government is better situated to determine where research funds should go, making grants and prizes the superior tools.115