What’s a better strategy for incentivizing innovation: the existing patent system or flashy, high-dollar prizes? This year, Elon Musk (Person of the Year in 2021, according to “Time” magazine) inspired heated debate when he announced a $100-million prize for novel carbon removal technologies. Some environmentalists were enthusiastic, though Zorina Khan—a professor of economics at Bowdoin College and a research associate at the National Bureau of Economic Research—expressed skepticism in conversation with the “New York Times” and on an episode of “Resources Radio.”

In this rebroadcasted episode, host Kristin Hayes talks with Khan about her research on the history of offering prizes for innovation. Khan contends that such contests historically have benefited elite members of society and that patent systems more regularly produce transformative technologies. Reflecting on Musk’s carbon removal prize, Khan concludes that such a contest could generate more awareness of climate issues but is unlikely to dramatically shift strategies for reducing carbon emissions.

References and recommendations:

“Carbon Capture and Storage 101” from Resources for the Future; https://www.rff.org/publications/explainers/carbon-capture-and-storage-101/

“$100M prize for carbon removal” from XPRIZE Foundation and Elon Musk; https://www.xprize.org/prizes/elonmusk

“What’s Better, a Prize or a Patent?” by Peter Coy; https://www.nytimes.com/2021/08/30/opinion/elon-musk-prize-patent.html

“Inventing Ideas: Patents, Prizes, and the Knowledge Economy” by B. Zorina Khan; https://global.oup.com/academic/product/inventing-ideas-9780190936082

“Democratization of Invention” by B. Zorina Khan; https://books.bowdoin.edu/book/the-democratization-of-invention-patents-and-copyrights-in-american-economic-development-1790-1920/

“Unlocking history through automated virtual unfolding of sealed documents imaged by X-ray microtomography” by Jana Dambrogio, Amanda Ghassaei, Daniel Starza Smith, Holly Jackson, Martin L. Demaine, Graham Davis, David Mills, Rebekah Ahrendt, Nadine Akkerman, David van der Linden, and Erik D. Demaine; https://www.nature.com/articles/s41467-021-21326-w