Inventing in the Shadow of the Patent System: Evidence from 19th-Century Patents and Prizes for Technological Innovations

NBER Working Paper No. 20731

Issued in December 2014

NBER Program(s):Development of the American Economy, Productivity, Innovation, and Entrepreneurship



Such institutions as patent systems cannot be well understood without an assessment of technological creativity in other contexts. Some have argued that prizes might offer superior alternatives to the award of property rights in inventions. Accordingly, this paper offers an empirical comparison of patents in relation to the award of prizes for technological innovation. The data set comprises a sample of patents, as well as exhibits and prizes at annual industrial fairs in Massachusetts over the course of the nineteenth century. The patterns shed light on the factors that influenced how specific inventions and inventors attempted to appropriate returns. Prizes in general provided valuable prospects for advertisements and commercialization, rather than inventive activity per se. Prize winners typically belonged to more privileged classes than the general population of patentees, as gauged by their wealth and occupational status. Moreover, the award of prizes tended to largely unpredictable, and was unrelated to such proxies for the productivity of the innovation as inventive capital or the commercial success of the invention. Prize-oriented institutions thus appear to be less systematic and not as market-oriented as patent systems. If inventors respond to expected returns, prizes may be less effective at inducing technological creativity.

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Document Object Identifier (DOI): 10.3386/w20731

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