Lerner-lerner tirole edit.ver2

Lerner-lerner tirole edit.ver2 - The Economics of...

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The Economics of Technology Sharing: Open Source and Beyond Josh Lerner and Jean Tirole Josh Lerner is the Jacob H. Schiff Professor of Investment Banking at Harvard Business School, Boston, Massachusetts, and Research Associate, National Bureau of Economic Research, Cambridge, Massachusetts. Jean Tirole is the Research Director of the Institut d'Economie Industrielle, University of Social Sciences of Toulouse, Toulouse, France, and Visiting Professor, Massachusetts Institute of Technology, Cambridge, Massachusetts. 1
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The open source process of production and innovation seems very unlike what most economists expect. Private firms usually pay their workers, direct and manage their efforts, and control the output and intellectual property thus created. In an open-source project, however, a body of original material is made publicly available for others to use, under certain conditions. In many cases, anyone who makes use of the material must agree to make all enhancements to the original material available under these same conditions. This rule distinguishes open source production from, say, material in the public domain and “shareware.” Many of the contributors to open source projects are unpaid. Indeed, contributions are made under licenses that often restrict the ability of contributors to make money on their own contributions. Open source projects are often loosely structured, with contributors free to pursue whatever area they feel most interesting. Despite these unusual features, recent years have seen a rise of major corporate investments into open source projects; for instance, IBM is reported to have spent over $1 billion in 2001 alone on such projects. 1 The most prominent example of open source production is software, which involves developers at many different locations and organizations sharing code to develop and refine computer programs. The importance of open source software can be illustrated by considering a few examples. The market for server software, which is used by the computers that make web pages available to users through the Internet, has been dominated by the open source Apache project since the inception of systematic tracking by Netcraft in 1995. As of March 2004, more than two-thirds of servers employed this or other open source products, rather than commercial alternatives from Microsoft, Sun, and 1 See < http://news.com.com/2100-1001-825723.html > (accessed March 21, 2004). 2
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other firms. The open source operating system called Linux accounts for 23 percent of the operating systems of all servers; moreover, Linux has rapidly outstripped Microsoft’s Windows program as the operating system most frequently embedded into products ranging from mobile phones to video recording devices. 2
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Lerner-lerner tirole edit.ver2 - The Economics of...

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