New Frontiers in the Economics of
Innovation and New Technology
New Frontiers in the
Economics of Innovation
and New Technology
Essays in Honour of Paul A. David
Edited by
Cristiano Antonelli
Professor of Economics and Director of the Department of Economics at
the University of Torino, Italy
Dominique Foray
Professor of Economics of Innovation and Director of the College of
Management of Technology at the Ecole Polytechnique Fédérale de
Lausanne, Switzerland
Bronwyn H. Hall
Professor of Economics at the University of California at Berkeley,
Research Associate at the National Bureau of Economic Research,
Cambridge, Massachusetts, and the Institute of Fiscal Studies, London
W. Edward Steinmueller
Professor of Information and Communication Technology Policy, SPRU –
Science and Technology Policy Research, University of Sussex, Falmer,
Brighton, UK
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
© Cristiano Antonelli, Dominique Foray, Bronwyn H. Hall and W. Edward
Steinmueller, 2006
All rights reserved. No part of this publication may be reproduced, stored in
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mechanical or photocopying, recording, or otherwise without the prior
permission of the publisher.
Published by
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Edward Elgar Publishing, Inc.
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A catalogue record for this book
is available from the British Library
Library of Congress Cataloguing in Publication Data
New frontiers in the economics of innovation and new technology: essays in
honour of Paul A. David/edited by Cristiano Antonelli . . . [et al.]
p. cm.
Includes bibliographical references and index.
1. Innovative technology–Economic aspects. 2. Diffusion of innovations–
Economic aspects. I. Antonelli, Cristiano. II. David, Paul A.
HC79.T4N472 2005
338’.064–dc22
2005046147
ISBN-13: 978 1 84376 631 5
ISBN-10: 1 84376 631 0
Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall
Contents
vii
List of contributors
PART I
1
The economics of innovation: between and Cristiano Antonelli, Dominique Foray, Bronwyn H. Hall and
W. Edward Steinmueller
PART II
2
3
4
5
GENERAL INTRODUCTION
PATH DEPENDENCE IN TECHNICAL CHANGE
Competing technologies, technological monopolies and the rate
of convergence to a stable market structure
Andrea P. Bassanini and Giovanni Dosi
23
Path dependence, localised technological change and the quest
for dynamic efficiency
Cristiano Antonelli
51
A history-friendly model of innovation, market structure and
regulation in the age of random screening of the
pharmaceutical industry
Franco Malerba and Luigi Orsenigo
Path dependence and diversification in corporate technological
histories
John Cantwell
6
Is the world flat or round? Mapping changes in the taste for art
G.M. Peter Swann
7
Waves and cycles: explorations in the pure theory of price for
fine art
Robin Cowan
PART III
8
3
70
118
158
188
THE ECONOMICS OF KNOWLEDGE
Learning in the knowledge-based economy: the future as viewed
from the past
207
W. Edward Steinmueller
v
vi
9
Contents
The economics of open technology: collective organisation
and individual claims in the ‘fabrique lyonnaise’ during the
old regime
Dominique Foray and Liliane Hilaire Perez
239
10
Measurement and explanation of the intensity of co-publication
in scientific research: an analysis at the laboratory level
255
Jacques Mairesse and Laure Turner
11
Epistemic communities and communities of practice in the
knowledge-based firm
Patrick Cohendet and Ash Amin
296
Markets for technology: ‘panda’s thumbs’, ‘calypso policies’
and other institutional considerations
Ashish Arora, Andrea Fosfuri and Alfonso Gambardella
323
The key characteristics of sectoral knowledge bases: an
international comparison
Stefano Brusoni and Aldo Geuna
361
12
13
PART IV THE DIFFUSION OF NEW TECHNOLOGIES
14
Uncovering general purpose technologies with patent data
Bronwyn H. Hall and Manuel Trajtenberg
15
Equilibrium, epidemic and catastrophe: diffusion of
innovations with network effects
Luís M.B. Cabral
16
Technological diffusion under uncertainty: a real options
model applied to the comparative international diffusion of
robot technology
Paul Stoneman and Otto Toivanen
PART V
17
427
438
POSTSCRIPT
An appreciation of Paul David’s work
Dominique Foray
Index
389
471
475
Contributors
Ash Amin, University of Durham, UK
Cristiano Antonelli, University of Turin, Italy
Ashish Arora, Heinz School of Public Policy and Management, Pittsburgh,
USA
Andrea P. Bassanini, OECD, Paris, France
Stefano Brusoni, University of Bocconi, Milan, Italy
Luís M.B. Cabral, New York University, USA
John Cantwell, Rutgers University, Newark, USA
Patrick Cohendet, Université Louis Pasteur, Strasbourg, France
Robin Cowan, Universiteit Maastricht, the Netherlands
Giovanni Dosi, Sant’Anna School of Advanced Studies, Pisa, Italy
Dominique Foray, Ecole Polytechnique Fédérale, Lausanne, Switzerland
Andrea Fosfuri, Universidad Carlos III, Madrid, Spain
Alfonso Gambardella, University of Bocconi, Milan, Italy
Aldo Geuna, SPRU – Science and Technology Policy Research, University
of Sussex, UK
Bronwyn H. Hall, University of California, Berkeley, USA
Liliane Hilaire Perez, Conservatoire National des Arts et Métiers, France
Jacques Mairesse, Institut National de la Statistique et des Etudes
Economiques, France
Franco Malerba, University of Bocconi, Milan, Italy
Luigi Orsenigo, University of Bocconi, Milan, Italy
W. Edward Steinmueller, SPRU – Science and Technology Policy Research,
University of Sussex, UK
Paul Stoneman, Warwick Business School, UK
vii
viii
Contributors
G.M. Peter Swann, Nottingham University Business School, UK
Otto Toivanen, Helsinki School of Economics, Finland
Manuel Trajtenberg, Tel Aviv University, Israel
Laure Turner, Ecole Nationale de la Statistique et de l’Administration
Economique, France
PART I
General Introduction
1. The economics of innovation:
between and Christiano Antonelli, Dominique Foray,
Bronwyn H. Hall and W. Edward Steinmueller
1
PRELUDE
The birth and infancy of innovation economics, as a specific area of academic study and empirical research, and one that had applications to real
problems of industrial growth, firm strategy and economic policy, occurred
at the same time that the boundaries of economic theory were expanding
horizontally in the 1950s and 1960s. During that period, economic theory
began to offer a detailed and interpretative framework for the study of economics, assimilated the Keynesian heresy as a structural variation in behavioural modelling, and foraged for new areas of research in which to apply
its analytical categories and its powerful mechanisms of systematic analysis. This newly found confidence in the methodological validity of individual decision-making and marginal calculations was based upon
rigorous assumptions about the rational behaviour of agents. The addition
of a new, large macroeconomic area based upon the paradigm of general
economic equilibrium, encouraged economists to venture still further into
new areas of application.
The extraordinary heuristic capacity of economic theory supported bold
claims of explanatory competence and scientific primacy for the field. It is
not surprising that those years are sometimes spoken of as economic imperialism. The new territories that economic theory colonised included the economics of health and education, of risk and insurance, of uncertainty and
information, and of marriage and the family. Economics and related disciplines claimed to be able rationally to assess choice, in all of its manifestations, by processing the alternatives through the machinery of finance,
probability and opportunity cost. At the same time there was a progressive
specialisation of competencies. Areas which up to then had been thought
of as interchangeable, such as international and regional, developed and
developing economies or emerging and mature industries, became distinct.
3
4
General introduction
There are many reasons why this phase can be metaphorically referred to
as the . Just as the Greek heroes started their campaign of conversion of the barbarians to the superiority of Greek culture and ideology
by winning the Golden Fleece, economists were convinced that their
insights had become universal. In particular, their insights could be
applied to the origin and spread of innovation and, consequently, to the
issues of technical progress, science, the university and, even, the creative
process.
The result was that economists asked themselves not only what creates a
nation’s wealth, but also why are certain countries more innovative than
others or why do certain historic periods appear to be more fertile and
dynamic than others? The analysis of what determines innovative activity,
identified as a specific form of economic action, was distinguished from the
analysis of the effects of introducing innovation.
In this way, innovation economics invaded the territory that had already
been subdivided by industrial economics, the theory of the firm, regional
economics while not ignoring important points of international economics
and, above all, public economics. The claim of scholars of innovation to
the ownership of the Golden Fleece was certainly at hand: the rate of
growth of economic systems and their share of the international market,
wage differentials and rates of profit were increasingly linked to innovative
capacity. Innovative capacity was (and still is) perceived as one of the fundamental source of a nation’s wealth and more specifically the ever changing, if not increasing, differences in that wealth.
The wealth of knowledge and the abundance of recipes, diagnoses and
therapies, deriving from the economics of innovation have tempted many
of its followers to advocate the , a contest for the capital cities
waged from what is still often regarded as the hinterland. Studying and
investigating the multifaceted field of innovation economics has, in fact,
more than once unearthed some awkward and significant results; results
that cannot easily be ignored and that are, at least in some circles, embarrassing for claimants to the Golden Fleece of a true knowledge of the
means and ends by which economic results are produced. This is true, above
all, in the dominant theory that the imposing expedition had advanced and,
indeed, financed.
Technological knowledge does not appear to be an exogenous flow into
the economic system, as had been assumed for the purpose of ‘simplifying’
analysis. Neither does it appear that the choice of factors of production or
individuals’ preferences are necessarily reversible. The workings of the
whole economic system seem to be far from such Newtonian physics.
Instead, the emerging model of economic life is one suffused with nonergodic dynamic elements, where the path taken shapes the destination
The economics of innovation
5
reached, where rate and direction are interdependent and where causes are
entangled with effects in uncomfortable new patterns. Correspondingly,
examining the origins and spread of innovation has made it possible to
understand clearly how incomplete and indeed inaccurate it is to assume
that economic agents act in a perfectly rational way with the corollaries of
perfect cognition and predictive capacity. There is a notable absence in the
real world of the race of super-rational agents endowed with rational
expectations and able, thereby, to anticipate a whole range of future actions
including innovation and new patterns of consumers’ preference.
But an even fiercer battle remains to be waged. For, if technological
knowledge is no longer exogenous, but instead strongly influenced by the
unfolding of economic life, the same hypotheses regarding the workings of
the market must also be questioned. Firms do not limit themselves to
adjusting outputs to prices, but also struggle to survive or race to
supremacy through innovation. In such a world, it can be understood that
it is no longer possible to imagine a single general economic equilibrium, it
is necessary to speak more of a range or, perhaps, even more precisely, of a
series of possible general economic equilibria. When the evolution of consumers’ preferences are also recognised as being endogenous and dependent upon experience, it seems equally doubtful that we are living in the best
available world, and that we might at the same time know how long or how
far our journey might be to a better one. As innovative capacity is strongly
influenced by the processes of accumulation of technical knowledge, the
direction that we take in attempting to add to this accumulation affects
what destination can be reached. And through this uncertainty, choice,
imagination and inspiration are reintroduced into economic life.
The weapons for the are by now ready. Will our heroes
manage to complete the journey which returns them to Athens? And, above
all, will Athens be able to appreciate the new language, the plates and gold
and silver that the Argonauts will bring with them? Will Athens be able to
recognise that its past certainties were limited and fragile, and were, above
all, based on static and incoherent assumptions, although they were the
source of great daring and farsightedness?
Economics of innovation enters the twenty-first century unable to decide
between the modest yet reassuring temptation to consolidate long-held certainties and the far bolder and more tenuous goal of rewriting the model.
Regardless, it has begun its return from the interior to the country of its
birth, eager to show that new truths are to be discovered that are less certain
but more complex and plausible than those made by the forefather conquerors.
This is the context into which the lifelong contribution of Paul David
can be better appreciated and valued. David has built essential pathways
6
General introduction
in both directions; in the as well as in the . The
contribution of David has been fundamental in the to building economics of innovation as a new discipline and area of specialist
expertise and competence. In the same fruitful career, Paul David has
contributed some of the most powerful analytical tools by which the
may be organised.
In this introduction we review David’s contributions to three important
areas in the economics of innovation: the economics of knowledge, the role
of path dependence in the evolution of economic equilibria and the
diffusion of new technologies. We have necessarily been selective in our
choice of contributions to discuss, lest this introduction become longer
than the volume it introduces! Nevertheless we hope that our brief surveys
will give the reader an idea of his many faceted contributions to this literature, at the same time that it places the chapters in the context in which
they were written.
2
THE ECONOMICS OF KNOWLEDGE
While ‘knowledge’ in a very broad sense has always been at the heart of
Paul David’s work, at both microscopic and macroscopic levels, he came to
explore this topic more systematically in the early 1990s. Starting with the
analysis of the peculiar properties of knowledge and information as an economic good, he proceeds to the historical and normative analysis of
resource allocation mechanisms in the field of knowledge production and
distribution and, more generally, socio-economic institutions that can be
relied upon to produce, mediate and use knowledge efficiently. The intellectual journey of Paul David in this field consists of a systematic exploration of the three-dimensional space in which ‘knowledge-products’ are
distributed.1 The first dimension of that space is the continuum between
secrecy and full disclosure; the second is the spectrum of asset ownership
status ranging from legally enforced private property rights to pure public
goods; and the third is the dimension along which codification appears at
one extreme and tacitness at the other.
How do institutions, technologies and economic factors determine the
location of knowledge in this three-dimensional space, and what are the
implications of this on allocative efficiency in the domain of knowledge
production and use? These two questions are raised repeatedly in Paul
David’s work. The argument that knowledge and information have the
properties of public goods creates the theoretical framework in which these
questions are addressed.
The economics of innovation
7
Knowledge, the Lighthouse and the Economist
David has made it very clear that saying a good (for example, knowledge)
is a public good, on the basis of the properties of non-excludability and
non-rivalry, does not imply that this good must necessarily be produced by
the state, that markets for it do not exist or that its private production is
impossible. It simply means that, considering the properties of the good, it
is not possible to rely exclusively on a system of competitive markets to
efficiently guarantee its production. Considering the example of the lighthouse as a paradigmatic case of a public good, David shows that the fact
that the lighthouse service was once provided by the private sector in the
UK, as Coase documented in a famous paper, does not mean that the lighthouse is a private good.2 Private markets function in this case because an
agent is granted local monopoly on the right to collect a tax in exchange for
the service provided. In the same way, the creation of a private monopoly
on new knowledge (a patent) enables the market to produce that good. But
in both cases the remedy is imperfect, for the owner of the monopoly will
not supply the ‘light’ (of the lighthouse or of the knowledge) at a price
(harbour tax or royalties) equivalent to the negligible cost of making these
goods available to additional users (the marginal cost of use of existing
knowledge is nil, as it is in the case of using the harbour’s lighthouse).3
What are the consequences of such a clear and strict position on the economic nature of knowledge? In the domain of the production of new ideas
(a very broad domain ranging from scientific discovery and technological
and engineering innovations to intellectual creation), the fundamental
problem for the allocative efficiency of competitive markets arises from the
externalities that exist because of the public good nature of ideas. It is,
therefore, crucial to analyse the historical emergence and the allocative
efficiency of various kinds of institutions devised to correct or to provide
alternatives to such market failures. The 3 Ps figure (public procurement,
patronage and private property) then provides a framework for such an
investigation.4
From the New Economics of Science . . .
In this direction, the main contribution of David (notably with Partha
Dasgupta) has been the rigorous and systematic exploration of the economics of ‘open science’ – including both a detailed analysis of the norm
of openness which is ‘incentive-compatible with a collegiate reputational
reward system based upon accepted claims to priority’,5 and an analysis of
the historical emergence of this institution.6 Both analytical and modelling
approaches show how efficient such a system is, for it ensures the rapid and
8
General introduction
complete diffusion of new knowledge while preserving a certain level of
incentive.7 Moreover, complete disclosure functions as a sort of ‘quality
assurance’ in so far as published results can be reproduced and verified by
other members of the community. Given the fact that by most measures the
productivity of scientific research as organised under these institutional
principles has been outstanding, it is clear that the economics of open
science provides a framework to study and assess other kinds of institution
with similar positive effects on the growth of knowledge. The economics of
free/libre open source software is, for example, a direct extension of the
work done on science. Today, David is in the forefront of research on this
particular class of social systems in which high rates of innovation are correlated with rich spillovers, implying that private agents do not always rely
on exclusivity and excludability mechanisms to capture private benefits
from their intellectual creative work.
. . . to the Comedy of the Commons
Owing to the peculiar features of knowledge, the production of knowledge has the potential to create a ‘combinatorial explosion’. This good is
difficult to control and can be used and reused infinitely to produce other
knowledge which is in turn non-excludable, non-rival and cumulative, and
so forth. In many cases knowledge is also deliberately disclosed and
organised in order to facilitate its access and reproduction by others.
All these processes give rise to the creation and expansion of a ‘knowledge commons’. ‘Knowledge commons’ are not subject to the classic
tragedy of the commons, a parable describing the case where exhaustible
resources (such as a pasture or a shoal of fish) are subject to destruction
by unregulated access and exploitation. Knowledge may be used concurrently by many, without diminishing its availability to any of the users,
and will not become ‘depleted’ through intensive use. As David recently
wrote, contradicting the American poet Robert Frost’s elegy to New
England civility, good fences do not make good neighbours: ‘information
is not like forage, depleted by use for consumption; data sets are not
subject to being “overgrazed” but instead are likely to be enriched and
rendered more accurate and more fully documented the more researchers
are allowed to comb through them’.8 The properties of non-excludability,
non-rivalry and cumulativeness have features akin to quasi-infinite
increasing returns.
Thus, the commons is not tragic, but comedic, in the classical sense of a
story with a happy ending. Managing and protecting the ‘knowledge
commons’ requires social regulations that are entirely different from the
social arrangements used to regulate ecological systems of exhaustible
The economics of innovation
9
resources. In this respect, Paul David has devoted a great deal of time and
intellectual creativity to conceive of remedies to the current tendency to
strengthen intellectual property systems, especially as they apply to scientific research and scientific databases.
‘Knowledge on Line’: the Economics of Learning-by-doing
Learning-by-doing has been a key form of technical change analysed by
Paul David in his studies in economic history, allowing him to address the
issues of localised learning, the importance of history, and the policy implications of supporting infant industries (see the section on path dependence).9 Apart from these works on economic history and path dependence,
the most interesting contribution of David related to learning-by-doing is
perhaps his emphasis on the fact that the economics of learning-by-doing
appears to be an area in which the conflict between static and dynamic
efficiency is particularly important. There is a tension between the normal
performance expected in the course of ordinary operations and the learning
aspect:
In most instances of learning-by-doing, the feedback from experience to inferred
understanding is severely constrained. The doers have limited facilities for accurately observing and recording process outcomes, or for hypothesizing about the
structure of the processes they are trying to control. Advances in knowledge that
are empirically grounded upon inferences from trial-and-error in a myopic
control process cannot be a big help when they are restricted in both the number
of trials they can undertake, and the states of the world they can imagine as
worth considering.10
In a similar vein, David has been a pioneer in building the concept of
experimental or explicitly cognitive learning-by-doing.11 Such a process
consists in performing experiments during the production of goods or services, or in the case considered by David and Sanderson, the production (or
non-production) of children. Through these experiments new options are
spawned and variety emerges. This is learning based on an experimental
concept, where data is collected so that the best strategy for future activities
can be selected. Technical and organisational changes are then introduced
as a consequence of learning-by-doing. In other words, explicitly cognitive
learning-by-doing consists of ‘on line’ experiments. The possibility of
moving on to explicitly cognitive learning in activities other than ‘craft
trades’ represents an important transition in the historical emergence of the
knowledge-based economy. As long as an activity remains fundamentally
reliant on learning processes that are procedures of routine adaptation and
leave no room for deliberate planning of experiments during economic
10
General introduction
activity, the gap between those who deliberately produce knowledge and
those who use and exploit it remains wide. When an activity moves on to
higher forms of learning where the individual can plan experiments
and draw conclusions, knowledge production becomes far more collectively
distributed.
The Increasing Use of Codification . . .
Paul David has been a leader in the analysis of the economic significance
of knowledge codification both at the macro and micro levels. Codified
knowledge serves inter alia as a storage depository, as a reference point and
possibly as an authority.12 As such, codification is a state in which knowledge is presented (improving memory, learning and communication), a tool
for constructing new knowledge and a means to facilitate co-ordination. In
pointing out the important distinction between knowledge that is codifiable
(in the sense of articulable) and that which actually is codified, and in focusing analytical attention upon the endogenous boundary between what is and
what is not codified at a particular point in time, David and colleagues have
helped to persuade economists to ‘colonize’ this new area (previously left
open to other social sciences) with their tools and concepts. At the macroeconomic level, Abramovitz and David have analysed knowledge codification as both the driving force behind the expansion of the knowledge base
and its favourite form; in short, the most salient characteristic of modern
economic growth.13
. . . and the Trap of ‘Taciturnity’
Investment in codification is suboptimal due to public good problems and
high fixed costs. Any lack of attention paid to complementary components
of a codified knowledge base (continuity of languages, software enabling
access to older files) runs the risk of irremediably altering the codified knowledge base and diminishing private and social returns from codification
investments.
One policy failure can, therefore, be seen in the lack of provision of
incentives to codify resulting in the building of excessive stocks of knowledge that are left in a ‘tacit’ form. These accumulations of tacit knowledge
are distributed throughout the private sector in a way that makes them
more costly to locate, to appraise and to transfer. Policies that encourage
strategies of excessive tacitness by some firms thus tend to reduce incentives for other firms to invest in searching for existing codified solutions to
their scientific and technological problems. A result may be excessive insularity and a waste of resources. In lowering the private rate of return on
The economics of innovation
11
monitoring and information searches over a wide field, such strategies and
policies will reinforce excess concentration of research and development
(R&D) in certain areas, and contribute to the under-utilisation of existing
stocks of knowledge. ‘Taciturnity’ (a word proposed by Paul in this
context) describes a deliberate failure to express feasibly codifiable information for strategic or cost reasons and may therefore create private and
social inefficiencies.14
Information and Communication Technologies as a Knowledge Instrument
and a Mischievous Break
A central theme in Paul David’s work on knowledge is the information and
communication technology (ICT) revolution in so far as it involves technologies geared to the production and dissemination of knowledge and
information. Apart from the productivity paradox issue, which is mainly a
‘diffusion story’ (see section 4 in this chapter), David has developed systematic analyses of the ways in which ICTs interact with organisational and
institutional changes to profoundly transform the organisation of economic activities dealing with knowledge creation.
E-science is a particular field which warrants in-depth investigation in
order to evaluate how far the system of knowledge production and use is
transformed through the full realisation of the potential of ICTs as knowledge instruments. Scientists are now reaching the step of building and
using a comprehensive virtual federation of resources. ‘Comprehensive’
means that the extent and nature of the resources available through the
cyber-infrastructure (people, data, information, computational tools, specialised instruments and facilities) could approach functional completeness
for a specific community of practice. However, institutional and organisational issues have to be addressed so that old institutions and organisations
are not an impediment to the full and efficient deployment of resources and
potentialities in an e-science environment.15
Paul David is certainly a great ‘techno-optimist’ and places strong hope
in the advances of new ICTs to improve the ways people are organising
their private and professional activities. However, he also knows very well
that any success in collaboration and interaction with colleagues is contingent on ‘emotional trust’, namely, a sense of shared identity and familiarity. And this is not going to emerge spontaneously from long-distance
collaboration even if mediated through the best of the present ICT infrastructure. This is why Paul applies to himself a practical recommendation
for enhancing trust in geographically distributed teams, which is to increase
travel early in the history of the project and to travel again each time emotional trust requires some further support!
12
General introduction
Public–Private Interactions and the Transferability of Knowledge
Direct transfers of knowledge between academic science communities and
the proprietary R&D organisations of the private business sector are especially problematic to institutionalise. This is because the coexistence of
two reward systems within any single organisation makes the behaviours
of the participants difficult to anticipate, and tends to undermine the formation of coherent cultural norms which promote co-operation among
team members. The main issue here is to maintain a proper balance
between, on the one hand, the requirements of openness and autonomy
of investigation (as these are required for the rapid growth of the stock of
knowledge) and, on the other, the need for delays and restrictions upon
the full disclosure of all new information (which facilitate the appropriation of economic returns needed to sustain investment in expanding the
knowledge base).16
David is a key player in the policy debate on the current transformations
of the relationships between science, technology and economic performance, and on the various institutional mechanisms to be designed to get a
better protection of the public domain of knowledge from further
encroachments by the domain of private property rights. A constant argument in his work is that the basic rationale of intellectual property law
depends on an independent public domain containing a stock of freely
accessible information. That shared collection of basic knowledge provides
the building blocks for new inventions.17
How will it be possible to maintain and expand this collection of freely
accessible basic knowledge in the long term? What kind of mechanisms
should be designed to preserve the intellectual commons, given that they
must be ‘incentive compatible’ with the private allocation of resources to
inventive and innovative efforts? These are the ‘big questions’ in his exploration of the future economic organisation of a well-functioning science and
technology system.18
A General Insight on this Work
As a rationale for his development of such a rich repertoire of works and
studies, there is in Paul David’s work a sense of inadequacies and erroneous
development in the passage between the understanding that economists
have gained about the very detailed mechanisms of knowledge production
and distribution, and the stylised facts encapsulated in the formalities of
macroeconomic models. This is perhaps why he continuously probes
deeper in the microanalysis of detailed resource allocation processes in
various areas of the economics of knowledge (open science, open source,