2017/28 LEM Working Paper Series

Diffusing New Technology without Dissipating Rents: Some Historical Case Studies of Knwoledge Sharing

James Bessen and Alessandro Nuvolari
technological change, technology diffusion, knowledge sharing, collective invention, patents

  JEL Classifications
N70, O33, O34

The diffusion of innovations is supposed to dissipate inventors’ rents. Yet in many documented cases, inventors freely shared knowledge with their competitors. Using a model and case studies, this paper explores why sharing did not eliminate inventors’ incentives. Each new technology coexisted with an alternative for one or more decades. This allowed inventors to earn rents while sharing knowledge, attaining major productivity gains. The technology diffusion literature suggests that such circumstances are common during the early stages of a new technology.
download pdf