The Simple Economics of Open Source
đź“ś Abstract
There has been a recent surge of interest in open source software development, which involves developers at many different locations and organizations sharing code to develop and refine programs. To an economist, the behavior of individual programmers and commercial companies engaged in open source projects is initially startling. This paper makes a preliminary exploration of the economics of open source software. We highlight the extent to which labor economics, especially the literature on “career concerns,” can explain many of these projects’ features. Aspects of the future of open source development process, however, remain somewhat difficult to predict with “off-the-shelf” economic models.
✨ Summary
Main contribution
The paper provides an economic interpretation of open-source software development. Drawing on case studies of Apache, Perl, and Sendmail, it argues that participation can be explained substantially through standard economic frameworks, especially labor economics and career concerns. Contributors may receive immediate benefits from using, modifying, or repairing software, as well as delayed benefits from reputation, career opportunities, and professional signaling. Firms may participate to support complementary commercial activities, improve internal capabilities, or influence software ecosystems. The paper also identifies unresolved questions concerning project modularity, governance, contributor growth, and long-term project survival. (hbs.edu)
Influence
The paper’s framework directly informed subsequent work by Lerner and Tirole on open-source research questions and was followed by a journal version, “Some Simple Economics of Open Source,” published in the Journal of Industrial Economics in 2002. (sciencedirect.com) Later research extended or tested its arguments through formal models of open-source production, studies of project leadership, analyses of open-source institutions, and empirical research on contributor motivations. (ideas.repec.org)