1 - The Economics of Open source Software Development: An Introduction

Abstract

This chapter introduces the fundamentals of Open Source Software (OSS), its nature, the central economic aspects and the key mechanisms of its development. It captures the most important lines of research dealing with the economics of OSS and its development. Research on these issues has made substantial progress in recent years, both in identifying particularities and in offering explanations for them. OSS is mainly programmed by volunteers who engage in such projects free of charge. The perplexing particularities such as volunteer programmers, free availability and the emergence of OSS-based for-profit firms create the backdrop for examining central research questions on the OSS phenomenon.. It discusses a primer on OSS and the surrounding development process including a sketch of how OSS-related activities actually generate revenues. The chapter addresses issues such as the motivation of for-profit firms in their participation in OSS, their relation to OSS communities, nature of sustainable OSS-based business models, and the innovation performance of OSS, addressing issues such as the innovation incentives for further developing an operating system or software applications for an operating system, and the impact of OSS competition on the willingness to innovate in software industries featuring highly concentrated market structures.