It is not quite a million-dollar question, but economists have a new €100,000 topic to tackle – a thinktank is putting up the cash prize for the best plan for Britain's exit from the European Union.

The Institute of Economic Affairs launches its Brexit Prize on Tuesday saying that "we need to give serious consideration to how the UK could have a free and prosperous economy outside the EU given that exit is a serious possibility after the next election".

The free-market thinktank is inviting entries from individuals and groups and will award the first prize of €100,000 to the best blueprint for the UK after leaving the EU. Entrants are asked to imagine a referendum has resulted in an "out" vote and the government has triggered article 50 of the Lisbon treaty. Candidates will need to cover the process of withdrawal and the repositioning of the UK in global trading and governance systems.

The judging panel will be chaired by Tory peer and former chancellor Lord Lawson, who recently claimed the British economy would be better off outside the EU.

"Now that we have been promised an in-out referendum on Britain and the EU in 2017, it is essential that this momentous decision is preceded by a well-informed debate," said Lawson.

"To date much of this debate has generated more heat than light. It is crucial that we should look into the policy framework that would be needed if Britain decides to leave the EU. The creation of the eurozone, of which the UK is (quite rightly) not a member, has fundamentally changed both the nature of the European Union and the case for the UK remaining a member of it."

The IEA, responsible for many of the policies implemented by Margaret Thatcher in the 1980s, said there was an urgent need to explore the implications for Britain of a so-called Brexit. The thinktank's Philip Booth said the choice of euros for the prize was symbolic. "The judges believe that exit from the EU should lead to an outward-looking, freely trading Britain and not an inward-looking Britain trying to shore up domestic markets and vested interests. The prize could just as well be dollars (or sterling) but we would hope that entrants will appreciate that we want a Brexit plan that will promote trade and prosperity for the UK, which will, itself, have benefits for the remaining EU."

It is inviting 2,000-word submissions from individuals, groups of individuals, academia and corporate bodies such as consultancy firms and investment banks by a 16 September. A shortlist will then be given more time to submit between 10,000 and 20,000 words to the judging panel, which includes historian David Starkey and Labour MP Gisela Stuart.

The Brexit prize follows a similar competition run by the thinktank Policy Exchange to find the least disruptive way to organise a breakup of theeuro. The £250,000 Wolfson Prize, the second most lucrative prize for economics after the annual Nobel prize, went to economist Roger Bootle, from Capital Economics, who is now on the IEA's judging panel.