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Equilibrium Selection and Public-good Provision: The Development of Open-source Software

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  • David P. Myatt
  • Chris Wallace

Abstract

Collective-action problems arise in a variety of situations. Open-source software is a recent and important example. Copyright restrictions on open-source projects stipulate that any user may modify the software so long as any resulting innovation is freely available to all. In economic parlance, the innovation is a public good. The economic theory of public-good provision raises a number of important questions. Who contributes to such a project, and who free rides? How might a social planner exploit the interdependence of project components to encourage contributions? Under what conditions will such actions result in successful provision? Using a simple game-theoretic framework and recent results from the study of equilibrium selection, we attempt to answer these questions. Under reasonable assumptions of asymmetry and less than complete information, the most efficient providers will contribute. Contributions can be elicited by 'integrating' the provision process when providers are sufficiently optimistic about the success of the project. Otherwise, the social planner may be better off 'separating' the components so that individual contributions are independent of each other. The analysis yields recommendations for the leaders of open-source projects and other similar collective-action problems. Copyright 2002, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 18 (2002)
Issue (Month): 4 ()
Pages: 446-461

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Handle: RePEc:oup:oxford:v:18:y:2002:i:4:p:446-461

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Web page: http://oxrep.oupjournals.org/

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Cited by:
  1. repec:old:wpaper:321 is not listed on IDEAS
  2. David P. Myatt & Chris Wallace, 2003. "Evolution in Teams," Economics Series Working Papers 177, University of Oxford, Department of Economics.
  3. Dongryul Lee & Byung Kim, 2013. "Motivations for Open Source Project Participation and Decisions of Software Developers," Computational Economics, Society for Computational Economics, vol. 41(1), pages 31-57, January.
  4. Gauguier, Jean-Jacques, 2009. "L’industrialisation de l’Open Source," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/4388 edited by Toledano, Joëlle.
  5. Sääskilahti, Pekka, 2006. "Buying Decision Coordination and Monopoly Pricing of Network Goods," MPRA Paper 5106, University Library of Munich, Germany.
  6. Juergen Bitzer & Ingo Geishecker & Philipp Schroeder, 2010. "Returns to Open Source Software Engagement: An Empirical Test of the Signaling Hypothesis," Working Papers V-321-10, University of Oldenburg, Department of Economics, revised Jan 2010.

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