Big Dollars, Big Rewards? The Roles of Prizes in Driving Innovation, with Zorina Khan

In February this year, we noticed at Resources for the Future that our explainer about carbon capture and storage—which provides an overview of the technology, along with its uses, benefits, and drawbacks—had suddenly skyrocketed in terms of page use on the website. When we investigated what had prompted this sudden expanded interest, we found Elon Musk’s announcement from the day prior: Musk had offered $100 million in prize money, through the XPRIZE Foundation, to teams that can envision, prototype, and validate scalable carbon capture and removable technology. At the end of the four-year contest period, several prizes will be awarded: $50 million for first place, $20 million for second place, and $10 million for third. In addition, the program will offer 25 six-figure scholarships to competing academic teams. According to XPRIZE officials, the $100 million on offer represents one of the largest—if not the largest—incentive prizes in history. So, this episode is about prizes: how they’ve been used, what we can learn from past successes and failures, and how they compare to other instruments that are designed to spur innovation. Zorina Khan joins the podcast to talk about these fascinating issues. Khan is a professor of economics at Bowdoin College and a member of the National Bureau of Economic Research. Her research examines issues in law and economic history, including intellectual property rights, technological progress in Europe and the United States, antitrust litigation, legal systems, and corporate governance. She’s an award-winning author, and her newest book is called "Inventing Ideas: Patents, Prizes, and the Knowledge Economy." 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 “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