Four Major Interactions between the Paradigms

Recall from chapter 1 that there are four separate types of interaction between the free innovation paradigm and the producer innovation paradigm. These were represented schematically in figure 1.1, which for convenience is reproduced here as figure 6.1. First, designs diffused from peer to peer via the free innovation paradigm can compete with products diffused by producers via the market, resulting in what my colleagues and I call a free-contested market. Second, designs diffused from peer to peer via the free innovation paradigm can complement products and services diffused by producers via the market, a situation we call a free-complemented market. Third, as is indicated by the

Figure 6.1

Interactions between the free innovation paradigm and the producer innovation paradigm. (Same as figure 1.1, reproduced here for the reader's convenience.)

downward-pointing arrow, free innovators "spill over” their free designs to free-riding start-up firms or incumbent producers. Fourth, as is indicated by the upward-pointing arrow, producers can supply tools and platforms to both support and shape free innovation.

In chapter 1, I briefly described the four paradigm interactions. Here I will describe what we know about each of them in more detail. This will provide a rich context for an exploration of producer strategies related to these interactions, and their effects on social welfare.

 
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