Positive Externalities and R&amp;D: Two Conflicting Traditions in Economic Theory

2016

Int J Commons

Abstract:In modern economics, the institutions surrounding the creation and development of new technologies are firms, markets and governments. We propose an alternative theory that locates the institutional origin of new technologies further back in the commons when self-organizing groups of technology enthusiasts develop effective governance rules to pool distributed information resources. The 'innovation commons' alleviates uncertainty around a nascent technology by pooling distributed information about uses, costs, problems and opportunities. While innovation commons are mostly temporary, because the resource itselfthe information about opportunities -is only temporarily valuable, they are a further addition to the Pantheon of commons, and suggest that the institutions of the commons -and the common pool resource of information about applications of the technology -may be far more important in the study of innovation than previously thought.

Section: The Innovation Problem: Beyond Firms and Statesmentioning

confidence: 77%

How innovation commons contribute to discovering and developing new technologies

Allen

2016

Int J Commons

“…the strong evidence of underinvestment in technological advance justifies public action to support private innovation.’ The market failure‐based social welfare argument in support of innovation policy is rarely challenged in economic theory, and even less so in innovation policy (cf. Boldrin and Levine ; Davidson and Spong ; Lindsay and Dougan ; Kealey and Ricketts ).…”

Section: Introductionmentioning

confidence: 99%

“…The market failure-based social welfare argument in support of innovation policy is rarely challenged in economic theory, and even less so in innovation policy (cf. Boldrin and Levine 2004;Davidson and Spong 2010;Lindsay and Dougan 2013;Kealey and Ricketts 2014).…”

Section: Introductionmentioning

confidence: 99%

The Social Costs of Innovation Policy

Davidson

2016

Economic Affairs

Self Cite

Innovation policy is designed to produce social benefits by solving a market failure problem associated with private investment in new knowledge. Yet the social costs of these policy interventions are routinely ignored. We use the Djankov et al. (2003) institutional possibility frontier model to analyse the trade‐offs between the social costs of disorder and those of dictatorship that particular innovation policies impose. We show how different innovation policies impose different types of social costs. We conclude that the case for public support for innovation policies is often both distorted and overstated because of failure to account for social costs.

“…On closer inspection however all of these policies are inescapably tools of government intervention to some degree, even intellectual property, which is at base a government granted monopoly (Boldrin and Levine 2008). This assumption is rarely challenged or questioned in economic theory, or more specifically in innovation policy (Boldrin and Levine 2004, Davidson and Spong 2010, Lindsay and Dougan 2013, Davidson and Potts 2015, even though there are many historical examples that illustrate the contrary (Nuvolari 2004, Boldrin andLevine 2008).…”

mentioning

confidence: 99%

“…Moreover, what are often ignored are the direct and indirect costs of government failure and regulatory capture (Stigler 1971, Krueger 1974. These failures include rent-seeking (Murphy et al 1993, Goolsbee 1998, Boldrin and Levine 2008, the identification of externalities (Davidson and Spong 2010) and agency problems (Holstrom 1989). Elinor Ostrom (2005) repeatedly argued that institutional diversity is a worthy goal, and especially so when we don't know what the right institutions are.…”

mentioning

confidence: 99%

The Innovation Commons Why it Exists, What it Does, Who it Benefits, and How

Allen

2015

SSRN Journal

Abstract. We propose a new type of commons -an 'innovation commons' -that is an emergent institutional solution to 'the innovation problem' (defined as a collective action problem, not a market failure problem). In an innovation commons entrepreneurs pool innovation resources (i.e. inputs into the innovation process) under defined access and governance rules. Innovation requires entrepreneurship, which requires information about market opportunities. This information has interesting characteristics that lend itself to becoming a common pool resource: it is dispersed about the economy; difficult to value in its parts; and largely produced through experiment and experience. Moreover, this information resource fits poorly in institutions of markets or states because uncertainty renders them comparatively costly. We show how the innovation commons solves this problem as a temporary institution that forms around a particular new idea at the very beginning of an innovation trajectory where uncertainty is highest.