Growth Effects of Non Proprietary Innovation

19 Pages Posted: 30 Jun 2002

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2002

Abstract

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 acitvities, if free goods were less tailored 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.

Keywords: Innovation, R and D, Growth, Open Source, Philanthropy, Monopoly, Imperfect Competition, Software Industry

JEL Classification: L12, L13, L16, L86, O31, O32, O34

Suggested Citation

Saint-Paul, Gilles, Growth Effects of Non Proprietary Innovation (May 2002). CESifo Working Paper Series No. 726. Available at SSRN: https://ssrn.com/abstract=316768

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

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Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute)

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IZA Institute of Labor Economics

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