Abstract
How does open source development work and how can profit-oriented firms harness this new way of production? These are the two main questions we investigate in this report. Reviewing the academic literature, we give a comprehensive survey of the state of the art in economic research on open source software. We first look at the motives of individual contributors and the organizational structures that emerge in open source projects. These are particularly interesting since open source software is a complex public good: non-rivalrous and, to a certain degree, non-excludable. Under normal circumstances, economic theory leads us to believe that free-riding and problems in coordination are prime obstacles in the collective provision of open source software. In the second part of this report, we consider the different business models based on open source software and, lastly, we look at the reasons for corporate contributions. Contrary to the private provision of open source software, its general corporate provision cannot be explained with altruism or group membership. Because ultimately, firms contribute in open source projects for a reason: to make a profit.
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