IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2008-047.html
   My bibliography  Save this paper

Intellectual Property Rights and Ex-Post Transaction Costs: the Case of Open and Closed Source Software

Author

Listed:
  • Sebastian von Engelhardt

    () (Friedrich Schiller University Jena, School of Economics and Business Administration)

Abstract

The economic characteristics of software and transaction costs explain, why closed source and open source software co-exist. It is about the efficient use of a non- and anti-scarce resource. But because of ex-post transaction costs that lead to information asymmetries, some property rights regarding the resource "source code" are not exclusively separable. Thus, the first best allocation of property rights, that would yield an optimal usage of a source code, is not realizable. Or, that is to say, a first best realization of contracts is not feasible. Hence, open and closed source software are two second best arrangements, both with specific assets and drawbacks. The principle of closed source benefits from direct (monetary) incentives and control, but has limits in its scope (size) because of transaction costs. Open source, on the one hand, benefits from its openness that creates spillovers and enables to incorporate human capital that is not acquirable for closed source firms. On the other hand, there are costs of openness, such as coordination costs (consensus finding, etc.) the danger of free riding or under provision, or forking.

Suggested Citation

  • Sebastian von Engelhardt, 2008. "Intellectual Property Rights and Ex-Post Transaction Costs: the Case of Open and Closed Source Software," Jena Economic Research Papers 2008-047, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2008-047
    as

    Download full text from publisher

    File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00101864
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Engelhardt, Sebastian v. & Freytag, Andreas, 2013. "Institutions, culture, and open source," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 90-110.
    2. Michael Fritsch & Sebastian von Engelhardt, 2010. "Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector," Jena Economic Research Papers 2010-049, Friedrich-Schiller-University Jena.
    3. Sebastian von Engelhardt, 2010. "Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models," Jena Economic Research Papers 2010-034, Friedrich-Schiller-University Jena.

    More about this item

    Keywords

    open source; intellectual property rights; transaction costs; information goods; modeling property rights;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Portal:Freie Software/Literatur in Wikipedia German ne '')

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2008-047. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Pasche). General contact details of provider: http://www.jenecon.de .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.