Open Source Software: Free Provision of Complex Public Goods

25 Pages Posted: 30 Jul 2001

See all articles by James E. Bessen

James E. Bessen

Technology & Policy Research Initiative, BU School of Law

Date Written: July 2005

Abstract

Open source software, developed by volunteers, appears counter to the conventional wisdom that private provision of public goods is socially more efficient. But complexity makes a difference. Under standard models, development contracts for specialized software may be difficult to write and ownership rights do not necessarily elicit socially optimal effort. I consider three mechanisms that improve the likelihood that firms can obtain the software they need: pre-packaged software, Application Program Interfaces (APIs) and Free/Open Source software (FOSS). I show that with complex software, some firms will choose to participate in FOSS over both "make or buy" and this increases social welfare. In general, FOSS complements proprietary provision, rather than replacing it. Pre-packaged software can coexist in the marketplace with FOSS: pre-packaged software addresses common uses with limited feature sets, while firms with specialized, more complex needs use FOSS.

Keywords: Software, Contracting, Information Goods, Complexity

JEL Classification: H41, L22, L86

Suggested Citation

Bessen, James E., Open Source Software: Free Provision of Complex Public Goods (July 2005). Available at SSRN: https://ssrn.com/abstract=588763 or http://dx.doi.org/10.2139/ssrn.588763

James E. Bessen (Contact Author)

Technology & Policy Research Initiative, BU School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

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