This paper studies how knowledge externalities are commons and enhance innovation. Through analysis of public and private expenditures on education of OECD countries, it shows that public expenditure on education is not committed to collect market failure as stipulated by almost of studies about knowledge spillover, knowledge externalities, and social learning processes. Based on context of knowledge as common resource and the complexity of knowledge externalities, the paper urges that: i) Knowledge externalities are complex common resources, hence public expenditure is done in form of public policy to solve social dilemmas related to these externalities, and ii) Public expenditure is allocated on education not only by the factor of positive externalities generated, but also by being complex commons constituent of peer production and learning society that are important for innovation.

Keywords
Knowledge Spillovers, knowledge externalities, knowledge as a common resource, knowledge externalities as
commons, social learning