The Economics of Technology Sharing: Open Source and Beyond

Intellectual Property and Open Source

Article Snapshot


Jean Tirole


Harvard NOM Research Paper No. 04-35, 2004


This paper surveys how economics helps understand open source software.

Policy Relevance

Open source software seems new and unique, but familiar economic concepts explain much of its operation.

Main Points

  • Open source software lets users change the code to suit their own needs; open source code under the General Public License (GPL) must be distributed free.


  • In open source, each individual’s role is visible, so he gets strong reputation rewards. For-profit firms like IBM supply products and services related to open source.


  • Limitations of open source include
    • Difficulty of coordination, so code is duplicated or never written
    • Expert developers might not make the interface appeal to casual users.


  • Some suggest that competition between open source and proprietary code benefits consumers so long as it does not displace code with user-friendly interfaces.


  • Firms using open source might be vulnerable to suits alleging patent infringement. The GPL prohibits the use of patented code.


  • Open source methods could move beyond software, but to what extent is unclear.


  • Firms accomplish some goals of open source using other arrangements, such as standards or patent pools.

Get The Article

Find the full article online

Search for Full Article