Evidence for Free Innovation


In this chapter I present evidence that free innovation is a very substantial phenomenon with respect to the development of products consumed within the household sector. As we will see, today tens of millions of consumers annually spend tens of billions of dollars creating and modifying products to better serve their own needs. In fact, aggregate household sector product development expenditures rival the scale of business sector expenditures by producers developing products for consumers. Next, we will see that more than 90 percent of the developers of product innovations in the household sector meet both of the criteria for free innovation specified in chapter 1: the innovators develop their innovations during their unpaid, discretionary time; and they do not actively protect their designs from free adopters. The remainder are aspiring entrepreneurs. Finally, I explore the nature of transaction-free self-rewards central to the viability of free innovation, and discuss why it can make economic sense for free innovators to reveal their innovations for free.

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