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The private-collective innovation model proposes incentives for individuals and firms to privately invest resources to create public goods innovations (von Hippel and von Krogh's paper in R&D Management, 2006). Public goods innovations are characterized by non-rivalry and non-exclusivity in consumption. To date, there is limited research available on private-collective innovation involving firms. This paper uses a case study design to empirically investigate and extend the private-collective innovation model. We examine the development of the Nokia Internet Tablet, that builds on both proprietary and open source software development, and that involves both Nokia developers and volunteers who are not employed by the company. We find that the incentives proposed by the private-collective innovation model made Nokia release and contribute to open source software for the Internet tablet but that the model also incurs “hidden costs.” We examine actions taken by Nokia to mitigate these costs throughout the development period. We provide empirical evidence for the private-collective innovation model and extend it by including costs and strategic actions in implementing the model. Implications for research and management practice are discussed.