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Discussion Paper Details

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Title: Growth Effects of Non-Proprietary Innovation

Author(s): Gilles Saint-Paul

Publication Date: November 2001

Keyword(s): growth, imperfect competition, innovation, monopoly, open source, philanthropy, R&D and software industry

Programme Area(s): International Macroeconomics

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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Bibliographic Reference

Saint-Paul, G. 2001. 'Growth Effects of Non-Proprietary Innovation'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3069