Growth Effects Of Nonproprietary Innovation
We study an endogenous growth model where a profit-motivated R and 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 out proprietary innovation which on net may reduce total innovation in the long run. These effects would be reinforced if philanthropical innovation diverted people from other productive activities, if free goods were less taylored to customers than proprietary ones, and 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. (JEL: L12, L13, L16, L86, O31, O32, O34) Copyright (c) 2003 The European Economic Association.
Volume (Year): 1 (2003)
Issue (Month): 2-3 (04/05)
|Contact details of provider:|| Web page: http://www.mitpressjournals.org/jeea|
|Order Information:||Web: http://www.mitpressjournals.org/jeea|
When requesting a correction, please mention this item's handle: RePEc:tpr:jeurec:v:1:y:2003:i:2-3:p:429-439. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristin Waites)
If references are entirely missing, you can add them using this form.