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Dynamics of Open Source Movements

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  • Susan Athey
  • Glenn Ellison

Abstract

This paper considers a dynamic model of the evolution of open‐source software projects, focusing on the evolution of quality, contributing programmers, and users who contribute customer support to other users. Programmers who have used open‐source software (OSS) are motivated by reciprocal altruism to publish their own improvements. The evolution of the open‐source project depends on the form of the altruistic benefits: in a base case the project grows to a steady‐state size from any initial condition; whereas adding a need for customer support makes zero‐quality a locally absorbing state. We also analyze competition by commercial firms with OSS projects. Optimal pricing policies again vary: in some cases the commercial firm will set low prices when the open‐source project is small; in other cases it mostly waits until the open‐source project has matured.

Suggested Citation

  • Susan Athey & Glenn Ellison, 2014. "Dynamics of Open Source Movements," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 294-316, June.
    • Handle: RePEc:bla:jemstr:v:23:y:2014:i:2:p:294-316
    DOI: 10.1111/jems.12053
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    Cited by:

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    2. Bottai, Carlo, 2015. "Open Innovation in a Model à la Hotelling," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201526, University of Turin.
    3. Michael Schwarz & Yuri Takhteyev, 2009. "Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem," NBER Working Papers 14946, National Bureau of Economic Research, Inc.
    4. Gastón Llanes, 2019. "Competitive strategy for open and user innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 280-297, April.
    5. Frank Nagle, 2019. "Open Source Software and Firm Productivity," Management Science, INFORMS, vol. 65(3), pages 1191-1215, March.
    6. Johannes Loh & Tobias Kretschmer, 2023. "Online communities on competing platforms: Evidence from game wikis," Strategic Management Journal, Wiley Blackwell, vol. 44(2), pages 441-476, February.
    7. Llanes, Gastón & de Elejalde, Ramiro, 2013. "Industry equilibrium with open-source and proprietary firms," International Journal of Industrial Organization, Elsevier, vol. 31(1), pages 36-49.
    8. Fershtman, Chaim & Gandal, Neil, 2011. "A Brief Survey of the Economics of Open Source Software," CEPR Discussion Papers 8434, C.E.P.R. Discussion Papers.
    9. Jeongmeen Suh & Murat Yılmaz, 2019. "Economics of Open Source Technology: A Dynamic Approach," Dynamic Games and Applications, Springer, vol. 9(1), pages 254-280, March.
    10. Frank Nagle, 2018. "Learning by Contributing: Gaining Competitive Advantage Through Contribution to Crowdsourced Public Goods," Organization Science, INFORMS, vol. 29(4), pages 569-587, August.
    11. Teppo Felin & Bruno S. Frey & Roger Lüthi & Margit Osterloh, 2012. "Community Enterprises—An Institutional Innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 33(5-6), pages 427-439, July.
    12. Terrence August & Wei Chen & Kevin Zhu, 2021. "Competition Among Proprietary and Open-Source Software Firms: The Role of Licensing in Strategic Contribution," Management Science, INFORMS, vol. 67(5), pages 3041-3066, May.
    13. Fursov, Konstantin & Linton, Jonathan, 2022. "Social innovation: Integrating product and user innovation," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    14. Abhishek Nagaraj, 2021. "Information Seeding and Knowledge Production in Online Communities: Evidence from OpenStreetMap," Management Science, INFORMS, vol. 67(8), pages 4908-4934, August.
    15. Murat Yılmaz, 2022. "Coexistence of proprietary and open‐source firms under product differentiation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 4153-4166, December.
    16. Jürgen Bitzer & Ingo Geishecker & Philipp J. H. Schröder, 2017. "Is there a wage premium for volunteer OSS engagement? – signalling, learning and noise," Applied Economics, Taylor & Francis Journals, vol. 49(14), pages 1379-1394, March.
    17. Lei Xu & Tingting Nian & Luís Cabral, 2020. "What Makes Geeks Tick? A Study of Stack Overflow Careers," Management Science, INFORMS, vol. 66(2), pages 587-604, February.
    18. Chenhui (Julian) Guo & Tae Hun Kim & Anjana Susarla & Vallabh Sambamurthy, 2020. "Understanding Content Contribution Behavior in a Geosegmented Mobile Virtual Community: The Context of Waze," Information Systems Research, INFORMS, vol. 31(4), pages 1398-1420, December.
    19. Chen, Xiaomeng & Forman, Christopher & Kummer, Michael E., 2021. "Chat more and contribute better: An empirical study of a knowledge-sharing community," ZEW Discussion Papers 21-061, ZEW - Leibniz Centre for European Economic Research.
    20. Ding, Rong & Ko, Chiu Yu & Shen, Bo, 2022. "Partial compatibility in two-sided markets: Equilibrium and welfare analysis," Economic Modelling, Elsevier, vol. 116(C).
    21. Chowdhury Mohammad Sakib Anwar & Konstantinos Georgalos, 2023. "Position Uncertainty in a Sequential Public Goods Game: An Experiment," Papers 2308.00179, arXiv.org, revised Apr 2024.
    22. Vidya Atal & Kameshwari Shankar, 2014. "Open Source Software: Competition with A Public Good," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(3), pages 333-345, September.
    23. Sacks, Michael, 2021. "Incentives for the over-provision of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 197-213.

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    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets

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