Template-Type: ReDIF-Paper 1.0
Title: Free and Open-Source Software: Coordination and Competition
Author-Name: Robin Ng
Author-Email: hello@robinng.com

Classification-JEL: D21, D26, L14, L17
Keywords: Open-Source Software, Network effects, Software Licensing

Abstract: Free and Open-Source Software (FOSS) are developed by a community of developers
led by a coordinator. Coordinators balance the following trade-off: (i) more developers
improve FOSS quality—a positive vertical differentiation effect; (ii) more
developers lead to more diverse views, driving FOSS characteristics away from
the preferences of existing developers—a negative horizontal differentiation effect.
FOSS are able to attract more developers when coordinators improve their level
of coordination, increasing the marginal vertical network effect, or by having a
more permissive Open-Source license, increasing the marginal horizontal network
effect. More permissive Open-Source licenses can intensify competition between
FOSS and proprietary software, resulting in lower prices. However permissive licenses
may reduce the incentives to coordinate FOSS, leading to lower quality
FOSS that only serve niche markets. I explore coordinators who may have different
motivations—self-interested Founders, volunteering Altruists, and profit-driven
Managers—discussing when and how they choose to coordinate FOSS.

Note: 
Length: 44
Creation-Date: 2024-08
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp585
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_585