tEmpirical studies have shown that millions of individual users develop new products and services toserve their own needs. The economic impact of this phenomenon increases if and as adopters in additionto the initial innovators also gain benefits from those user-developed innovations. It has been arguedthat the diffusion of user-developed innovations is negatively affected by a new type of market failure:value that others may gain from a user-developed product can often be an externality to consumer-developers. As a result, consumer innovators may not invest in supporting diffusion to the extent thatwould be socially optimal. In this paper, we utilize a broad sample of consumers in Finland to explore theextent to which innovations developed by individual users are deemed of potential value to others, andthe extent to which they diffuse as a function of perceived general value. Our empirical analysis supportsthe hypothesis that a market failure is affecting the diffusion of user innovations developed by consumersfor their own use. Implications and possible remedies are discussed.© 2015 Z. Published by Elsevier B.V. This is an open access article under the CC BY license (http://