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Economic studies on OSS

Lerner and Tirole (2002)

Josh Lerner and Jean Tirole are economists who have contributed significantly to the understanding of open source business models. In their seminal 2002 paper, “Some Simple Economics of Open Source”, they explore the unique aspects of open source software (OSS) and provide key insights into the motivations behind this model and its economic implications. Here are some of the main ideas from their work:

  1. Private-Collective Innovation: Lerner and Tirole propose that open source is an example of a “private-collective” innovation model, which is distinct from the traditional private investment or collective action models. In this model, developers bear the costs of developing the software but share the output freely. This is counter-intuitive to conventional economic theory, which suggests that individuals need exclusive rights to an innovation to recoup their investment.

  2. Developer Motivations: They suggest that developers are motivated to contribute to open source projects due to a mix of intrinsic and extrinsic motivations. Intrinsic motivations include the enjoyment of coding, the intellectual challenge, and the belief in open source ideology. Extrinsic motivations include enhancing one’s reputation, improving job prospects, and gaining from learning and personal development.

  3. Incentives for Firms: Firms can benefit from an open source model in several ways. By releasing software as open source, they can tap into a global community of developers for improvements and bug fixes, reducing their own development costs. They can also use open source as a strategic tool, for instance, to undermine a competitor’s proprietary product.

  4. Sustainability: Lerner and Tirole also discuss the sustainability of the open source model. They suggest that as long as the personal (reputation, career improvement) and collective (improved software) benefits of contributing to open source projects outweigh the costs, the model will remain viable.

  5. Implications for Policy and Management: The authors suggest that understanding the economics of open source has important implications for policy (such as intellectual property rights) and for management (like how to motivate and organize software developers).

The ideas of Lerner and Tirole have been influential in shaping the understanding of the economics of open source, and their work is often cited in discussions of open source business models.

More recent work

  1. Riehle et al. (2009): In their paper, “The Economic Motivation of Open Source: Stakeholder Perspectives”, the authors conduct an empirical study on the economic motivation behind open source software. They examine perspectives from various stakeholders, such as individual developers, commercial firms, and user firms, revealing a variety of economic interests and strategies.

  2. Fitzgerald (2006): In “The Transformation of Open Source Software”, Brian Fitzgerald discusses the evolution of open source software from a community-driven approach to a commercial approach, noting that many companies have successfully adopted hybrid models that combine elements of open source and proprietary software.

    From the abstract: “A frequent characterization of open source software is the somewhat outdated, mythical one of a collective of supremely talented software hackers freely volunteering their services to produce uniformly high-quality software. I contend that the open source software phenomenon has metamorphosed into a more mainstream and commercially viable form, which I label as OSS 2.0”

  3. Bonaccorsi and Rossi (2006): In their paper, “Comparing Motivations of Individual Programmers and Firms to Take Part in the Open Source Movement”, the authors investigate the motivations of both individuals and firms in participating in open source projects. Their findings highlight the complex interplay between economic and non-economic motivations.

  4. West and O’Mahony (2008): In “The Role of Participation Architecture in Growing Sponsored Open Source Communities”, the authors explore how firms sponsoring open source projects can design the participation architecture to maximize community growth and firm benefits.

  5. Wynn Jr. (2005): In “Open Source Software Projects as User Innovation Networks - No Manufacturer Required?”, Donald Wynn Jr. applies the concept of user innovation networks to open source projects, suggesting that such projects can be seen as a form of user innovation without a traditional manufacturer.

  6. Popp (2011): Karl Michael Popp’s book “Profit from Software Ecosystems: Business Models, Ecosystems and Partnerships in the Software Industry” explores how software companies can create successful business models and partnerships. The author covers both open source and proprietary software ecosystems.

  7. Teixeira (2015): In “Understanding Collaboration in the Open-Source Arena: The Cases of WebKit and OpenStack”, Teixeira investigates collaboration dynamics within open source communities and their implications for open source businesses.

  8. Gamalielsson and Lundell (2014): In “Sustainability of Open Source software communities beyond a fork: How and why has the LibreOffice project evolved?”, the authors examine the sustainability of open source communities and their impact on open source businesses.

Page last modified: 2023-05-17 01:55:14