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Diffusing New Technology Without Dissipating Rents: Some Historical Case Studies of Knowledge Sharing

36 Pages Posted: 7 May 2014  

James E. Bessen

Boston University - School of Law; Research on Innovation

Alessandro Nuvolari

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Date Written: May 6, 2014

Abstract

The diffusion of innovations is supposed to dissipate inventors’ rents. Yet in many documented cases, inventors freely shared knowledge with rivals, including in steam engines, iron and steel production and textile machinery. Using a model and case studies, this paper explores why sharing did not eliminate inventors’ incentives. Each new technology coexisted with an alternative for one or more decades. This allowed inventors to earn high rents while sharing knowledge, making major productivity gains. In contrast, patents generated little value. The technology diffusion literature suggests that such circumstances are common during the early stages of a technology. This has important implications for innovation policy.

Keywords: technological change, technology diffusion, knowledge sharing, collective invention, patents

JEL Classification: N70, O33, O34

Suggested Citation

Bessen, James E. and Nuvolari, Alessandro, Diffusing New Technology Without Dissipating Rents: Some Historical Case Studies of Knowledge Sharing (May 6, 2014). Boston Univ. School of Law, Law and Economics Research Paper No. 14-18. Available at SSRN: https://ssrn.com/abstract=2433567 or http://dx.doi.org/10.2139/ssrn.2433567

James E. Bessen (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Research on Innovation ( email )

202 High Head Rd.
Harpswell, ME 04079
United States
617-531-2092 (Phone)

Alessandro Nuvolari

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta', 33-I-56127
Pisa
Italy

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