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Abstract:
This paper reviews the recent literature on the economics of open source software. Two different sets of issues are addressed. The first looks at the incentives of programmers to participate in open source projects. The second considers the business models used by profit-making firms in the open source industry, and the effects on existing closed source firms. Some possible future research directions are also given.

open source software, programmer incentives, open source business models

Abstract:
This paper investigates the conditions that lead to the so-called 'waterbed' effect in the context of price regulation. This is the effect whereby regulation of one of the prices of a multiproduct firm causes one or more of its other unregulated prices to change as a result of the firm's profit-maximising behaviour. A waterbed effect is shown to arise when demands and/or marginal costs are interdependent, firms use nonlinear pricing, or there is a zero-profit constraint or global price cap. Some implications for market definition, welfare analysis of regulation, non-price competition, collusion and two-sided markets are also discussed, as well as specific applications to fixed-to-mobile termination and bank overcharges.

waterbed effect, regulation, multiproduct firms, two-sided markets

Abstract:
This paper reviews and compares patent pools, intellectual property clearinghouses and copyright collectives as alternative systems for promoting efficient access to licensable intellectual property in a 'market for technology' (Arora et al 2001). These systems aid downstream use of innovations by economizing on search and transaction costs faced by licensees, as well as potentially mitigating the conditions that lead to the 'tragedy of the anti-commons' (excessively high license fees and under-use of innovations). We compare and classify different systems in terms of their features, review some existing systems, and discuss their economic characteristics.

intellectual property, licensing, markets for technology, patent pools, clearinghouses

Abstract:
This paper illustrates basic pricing issues in two-sided markets using some simple linear models based on Rochet & Tirole (2006) and Armstrong (2006). Monopoly, first-best and second-best prices when a single platform charges either usage fees or membership fees are examined. Some implications for competition policy and regulation of two-sided markets are are also discussed.

two-sided markets, platforms, pricing

Abstract:
We consider patent pool formation by owners of essential patents for differentiated standards that may be complements or substitutes in use. Pooling improves coordination in terms of royalty setting within a standard but provokes a strategic response from licensors in the competing standard. We characterise the incentives to form and defect from pools within standards and show how pool formation and stability depend on competition between standards. We also examine strategic patent pool formation by consortium standards and show that policies promoting compatibility of standards may increase or decrease welfare depending on the effects on the incentives to form pools.

patent pools, competing standards, consortium standards

Abstract:
This paper presents the results of a survey of economics bloggers. The survey attempted to assess the characteristics of these bloggers, their blogging activity, and factors affecting their motivations for blogging. Based on the results, bloggers are also separated into groups of academics and non-academics, and those with and without commercial elements on their blogs, and differences in activity and motivations between these groups are tested for. The relationship between time spent and blog posts written is also estimated.

Blogging, bloggers, economics blogs, survey

Abstract:
This paper develops a model of simple 'reputation systems' that monitor and publish information about the behavior of sellers in a market with search frictions and asymmetric information. The reputations created by these systems influence the equilibrium search investments of buyers and thus provide for market-based 'punishment' of bad behavior. Our model allows us to determine the effects of the introduction of a reputation system on the behavior and welfare of buyers and sellers in such a market. We show that a simple reputation system that rewards honesty can enhance welfare by allowing good sellers to truthfully signal their type. However, we also show that the same reputation system can delay the creation of such information if bad sellers mimic the signalling strategy of good sellers. In this case, we show that an alternative simple reputation system that screens for type can be superior.

reputation, asymmetric information, competing auctions

Abstract:
We focus on downstream uses that combine multiple intellectual property rights and examine the effects of introducing an intellectual property clearinghouse that reduces transaction costs associated with licensing. We show that this causes equilibrium royalties to rise in some cases and may harm licensors because clearinghouse by itself does not eliminate the 'tragedy of the anticommons'. Downstream welfare effects may also be positive or negative and we characterise the effects on downstream manufacturers and final consumers. We also show that total welfare is most likely to increase following a transaction cost reduction when the number of intellectual property rights per downstream use is small, or if rights are relatively substitutable in downstream use, but it is also possible for welfare to decrease.

Intellectual property, licensing, tragedy of the anticommons, clearinghouses

Abstract:
We analyse the basic economic issues relating to third-party intellectual property clearinghouses that act as licensing intermediaries. We identify economic functions of clearinghouses and discuss ways that they can improve efficiency in licensing through centralisation and independence. We then examine clearinghouse strategy and policy with regard to establishing new clearinghouses, clearinghouse pricing and competition between clearinghouses. We also consider effects on incentives to invest in R&D and anti-trust issues.

intellectual property, licensing, clearinghouses

Abstract:
We examine third-party clearinghouses that license innovations on behalf of inventors when downstream uses require licenses to multiple complementary innovations. We consider two simple clearinghouse royalty redistribution schemes, and two different innovation environments. We show that in most cases clearinghouses increase incentives to invest in R&D as they increase profits from licensing. However, expected profits of inventors who have the unique ability to develop a crucial component may be reduced. We also show that clearinghouses may increase or decrease expected welfare, and are more likely to be beneficial when R&D costs are relatively high, and/or the probability of success for inventors is relatively low.

Intellectual property, licensing, clearinghouses, anticommons

Abstract:
We examine the effects of informational intermediation by a third party 'infomediary' in a search model with heterogeneous seller qualities and asymmetric information. The infomediary earns revenue by selling a list of accredited sellers (a 'guidebook') to buyers and selling accreditations to sellers. We show that such information always improves welfare but can hurt informed buyers (as well as the uninformed) if it is not sufficiently informative about seller qualities. The model also provides a number of insights concerning the private and social incentives to create information, and the determinants and nature of demand for infomediation services by buyers and sellers.

informational intermediation, asymmetric information, search

Abstract:
This paper reviews and compares patent pools, intellectual property (IP) clearinghouses, and copyright collectives as systems for promoting efficient access to licensable IP in a market for technology. These systems promote downstream use of innovations by economizing on search and transaction costs in licensing, as well as potentially mitigating the conditions that lead to the tragedy of the anti-commons and other coordination problems in multilateral licensing. We compare and classify different systems in terms of their features, review some existing systems, and discuss their economic characteristics.

Abstract:
We develop a model of simple "reputation systems" that monitor and publish information about the behavior of sellers in a search market with asymmetric information. The reputations created influence the equilibrium search patterns of buyers and thus provide for market-based "punishment" of bad behavior. We show that a reputation system that rewards honesty can enhance welfare by allowing good sellers to truthfully signal their type. However, the same system can be prone to strategic manipulation by sellers who always have low-quality products. In that case, we show that an alternative system which assigns reputations based on product quality rather than honesty can be superior.

Abstract:
We examine the effects of provision of information about seller qualities by a third-party in a directed search model with heterogeneous sellers, asymmetric information, and where prices are determined ex post. The third party separates sellers into quality-differentiated groups and provides this information to some or all buyers. We show that this always raises total welfare, even if it causes the informed buyers not to trade with low quality sellers. However, buyers and low quality sellers may be made worse off in equilibrium, and in many cases most of the gains accrue to high quality sellers. We also examine the provision of information by a profit maximizing monopoly, and show that it may have an incentive to overinvest in the creation of information relative to the social optimum.

search, directed search, informational intermediation, asymmetric information