The Centre for European Economic Research (ZEW) in Mannheim has awarded the Heinz König Young Scholar Award for the fifth time. This year, Carlos D. Santos from Portugal received the research award for his paper about how sunk costs of investments in research and development affect the investment behaviour of a highly competitive industrial sector. Santos is economist and is currently finishing his PhD at the London School of Economics.

Participants of the ZEW Summer Workshop

The annual ZEW award comes with a prize money of 5,000 Euros and additionally includes the offer to do research at the ZEW for several months. This year, the prize is sponsored by MLP (Marschollek, Lautenschläger und Partner), a German financial services supplier.

Santos developed a dynamic model of competition which analyses incentives for companies to invest in physical capital and in research and development as well. The assumption at this juncture is that there are innovative and non-innovative competitors in the market at the same time and therefore the sunk costs can be identified by comparing both groups. Moreover, the model is a solution for the problem of multi-dimensionality, which makes it easier to predict results. Santos examines in his empirical analysis the highly innovative die and mould industry in Portugal. His model indicates that there are high sunk costs in this industrial sector which act as barriers for companies which aim to enter the market. ZEW president, Prof. Dr. Dr. h.c. mult. Wolfgang Franz, awarded the prize on behalf of MLP. He honours Santos's paper in his speech saying that it is was an important contribution to show disincentives of sunk costs in innovative industrial sectors. "The paper is an important contribution to the debate about subsidies and the funding of start-ups in dynamic industrial sectors", Franz said.

The Heinz König Young Scholar Award is named after the ZEW founding director, Prof. Dr. Dr. h.c. Heinz König who died in 2002. The prize awards excellent empirical papers by young economists. The ZEW does not want to add another prize to the wide range of awards for established researchers but prefers to sponsor young economists. The Heinz König Young Scholar Award is awarded at the annual ZEW Summer Workshop taking place in Mannheim. The Summer Workshop's aim is to qualify young economists. A wide range of papers are submitted and the best are chosen in a hard-fought selection process. About 12 to 16 young economists from Germany and abroad are invited to Mannheim. There they can discuss their papers with other young economists as well as specially invited established researchers. The best submitted paper is awarded the Heinz König Young Scholar Award.


Dr. Georg Licht, Phone: +49/621/1235-177, E-mail:

Carlos Daniel Santos with the president of the ZEW, Prof. Dr. Dr. h.c. mult. Wolfgang Franz



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