Abstract

Free innovation involves innovations developed and given away by consumers as a “free good,” with resulting improvements in social welfare. I define a free innovation as a functionally novel product, service or process that (1) was developed by consumers at private cost during their unpaid discretionary time (that is, no one paid them to do it) and (2) is not protected by its developers, and so is potentially acquirable by anyone without payment – for free. As we will see, free innovation has very important economic impacts, but from the perspective of participants, it is fundamentally not about money.