Evidence for Free Innovation (Chapter 2)

The importance of free innovation depends in large part on its scale and scope. In chapter 2, we will see from national surveys that free innovation is important on both of these dimensions. In just six countries surveyed to date, tens of millions of individuals have been found to collectively spend tens of billions of dollars on a wide range of products for personal use. A cluster analysis shows that about 90 percent of household sector innovators meet the two criteria specified in the definition of free innovation. Less than 10 percent of household sector innovators are interested in becoming entrepreneurs or in selling their innovations to producers.

A central feature of the free innovation paradigm is that it is free from compensated transactions. I explain what compensated transactions are, and how free innovators can viably innovate and freely reveal their innovations without resorting to them.

Viability Zones for Free Innovation (Chapter 3)

Innovation opportunities are "viable” for free innovators or producers only when their innovation-related benefits equal or exceed their innovation-related costs. In chapter 3, I adapt modeling discussed by Baldwin and von Hippel (2011) to describe the conditions required for innovation viability within three innovation "modes”: free innovation by single individuals in the household sector of the economy, collaborative free innovation by multiple household sector participants, and innovation by producers.

Baldwin and I argue that the number of innovation opportunities that are viable for individual and collaborative free innovation is increasing rapidly as powerful, easy-to-use design and communication technologies become steadily cheaper. Across many fields, radical reductions in design costs are being driven by advances in computerized design tools suitable for personal use. At the same time, radical reductions in personal communication costs are being driven by advances in the technical capabilities of the Internet. Field-specific tools are following the same trend. For example, inexpensive and easy- to-use tools for genome modification have greatly increased the number of opportunities for biological innovation that are viable for free innovators in the household sector.

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