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Growth Effects of Non-Proprietary Innovation

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Author Info
Saint-Paul, Gilles

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Abstract

We study and endogenous growth model where a profit-motivated R&D sector coexists with the introduction of free blueprints invented by philanthropists. These goods are priced at marginal cost, contrary to proprietary ones, which are produced by a monopoly owned by the inventor. We show that philanthropy does not necessarily increase long-run growth and that it may even reduce welfare. The reason is that it crowds our proprietary innovation, which on net may reduce total innovation in the long run. These effects would be reinforced if philanthropical inventors sometimes came out with another version of an existing proprietary good. Dynamics can also be characterized and it is shown that the impact effect of free inventions on growth is positive.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3069.

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Date of creation: Nov 2001
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Handle: RePEc:cpr:ceprdp:3069

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Related research
Keywords: growth; imperfect competition; innovation; monopoly; open source; philanthropy; R&D; software industry;

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Find related papers by JEL classification:
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights

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  1. Henkel, Joachim & von Hippel, Eric, 2003. "Welfare Implications of User Innovation," CEPR Discussion Papers 4063, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Paola Giuri & Gaia Rocchetti & Salvatore Torrisi, 2002. "Open Source Software: From Open Science to New Marketing Models," LEM Papers Series 2002/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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