Non rivalry and complementarity in computer software
AbstractIn this paper we contend that – contrary to what argued by a vast part of the literature – computer software and, more in general, digital goods (i.e. symbolic strings on an electronic medium with some eco- nomic value) do not present the characteristics of a public good as they do not suffer from lack of rivarly and excludability any more than other durable goods which are regularly allocated on competitive markets. We argue instead that the “market allocation problem” – if any – with digital goods does not arise from their public nature but from some pe- culiar characteristics of the production technology. The latter presents the nature of a typical problem solving activity as far as the produc- tion of the first unit is concerned, this means that innovative activities in computer software are characterized by high degrees of interdepen- dencies, cumulativeness, sequentiality, path dependence and, more in general, sub-optimality arising from imperfect problem decompositions. As far as the production of further units is concerned, we observe in- stead high (but not infinite) expansibility and perfect codification (lack of any tacit dimension) which make diffusion costs rapidly fall. Given such claims, we argue that a standard “Coasian” approach to property rights, designed to cope with the externalities of semi-public goods may not be appropriate for computer software, as it may decrease both ex-ante incentives to innovation and ex-post efficiency of diffusion. On the other hand the institutional definition of property rights may strongly influence the patterns of technological evolution and division of labor in directions which are not necessarily optimal.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 25589.
Date of creation: 2006
Date of revision:
Intellectual property; hierarchies; innovation; software; digital goods;
Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marengo, Luigi & Dosi, Giovanni, 2005.
"Division of labor, organizational coordination and market mechanisms in collective problem-solving,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 58(2), pages 303-326, October.
- Luigi Marengo & Giovanni Dosi, 2003. "Division of Labor, Organizational Coordination and Market Mechanism in Collective Problem-Solving," LEM Papers Series 2003/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Michele Boldrin & David Levine, 2002.
"The Case Against Intellectual Property,"
American Economic Review,
American Economic Association, vol. 92(2), pages 209-212, May.
- Danny Quah, 2003.
"Digital Goods and the New Economy,"
CEP Discussion Papers
dp0563, Centre for Economic Performance, LSE.
- Lu Hong & Scott E. Page, 1998. "Diversity and Optimality," Research in Economics 98-08-077e, Santa Fe Institute.
- Herbert A. Simon, 2002. "Near decomposability and the speed of evolution," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 587-599, June.
- Hong, Lu & Page, Scott E., 2001. "Problem Solving by Heterogeneous Agents," Journal of Economic Theory, Elsevier, vol. 97(1), pages 123-163, March.
- Francesco Rentocchini, 2010.
"Sources and characteristics of software patents in the European Union: some empirical considerations,"
Openloc Working Papers
1022, Public policies and local development.
- Rentocchini, Francesco, 2011. "Sources and characteristics of software patents in the European Union: Some empirical considerations," Information Economics and Policy, Elsevier, vol. 23(1), pages 141-157, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.