Harvesting Altruism in Open-Source Software Development
Journal of Optimization Theory and Applications, Vol. 118, No. 2, August 2003
36 Pages Posted: 4 Jun 2002 Last revised: 2 Jul 2014
Date Written: May 1, 2002
Firms have the choice of developing software as either open source or closed source. The open-source approach to software development has been advocated as a new and better method for developing high quality software than the traditional closed-source approach. In open source, volunteer programmers freely contribute code to develop and improve the software. This paper describes the key nonpecuniary motivations for these programmers. They are less motivated to contribute if they observe commercial marketing of the open-source software they helped create, leading to a reduction in improvements to the software. A primary concern for software firms seeking to develop and market open-source software is, thus, how the motivation of contributors should be managed. We examine optimal pricing strategies for open-source and closed-source software keeping in mind the distinct motivations of programmers in the two cases. We compare profits and software qualities from the two approaches and provide implications for firms in the software industry.
Keywords: Open source, pricing, altruism, optimal control, software management, the maximum principle, chattering control
JEL Classification: C61, D42, D6, D84
Suggested Citation: Suggested Citation