Open-Source Software: Who Needs Intellectual Property?

The Foundation for Economic Education publishes a journal called 'The Freeman: Ideas on Liberty'. They published this article in January: Open-Source Software: Who Needs Intellectual Property? by Michele Boldrin and David K. Levine The market for open-source software—uncopyrighted, freely reproducible computer programs—is not well understood by economists. A central source of surprise is that innovation can thrive in a market without traditional intellectual property (IP). But as we argued in a 2005 unpublished paper, "Perfectly Competitive Innovation," as a matter of theory there is no reason to believe that monopoly power through IP is needed for innovation. The market for open-source software is the poster child for this perspective.


"The market for open-source software--*UNCOPYRIGHTED*, freely reproducible computer programs--is not well understood by economists." [Emphasis added] Indeed, it isn't well understood by economist. Bojan Sudarevic

Part of the problem is that there is a lot of misinformation out there, such as: 1) the marginal cost of production of software is zero. This is not true. There are costs associated with transmission and/or media and these are not zero. They are however lower than for traditionally licensed software and they are so low that it is generally better to write off the costs as a marketing expense rather than try to recover them from customers. 2) open source == public domain. This is not true either. It is the case that open source software does not reserve many rights traditionally reserved by copyright holders so may be seen as somewhere "close to" uncopyrighted from a traditional software perspective. I think a real hard look at the economics behind open source (perhaps as a PhD thesis or the like) would be a welcome edition. Otherwise, we are left fighting