The Comingled Code: Open Source and Economic Development

Open Source, Intellectual Property and Innovation and Economic Growth

Article Snapshot


Josh Lerner and Mark Schankerman


The MIT Press, Cambridge, MA, 2010


Software plays a key role in economic growth. Some governments promote open source software to spur growth. Developers and users “mix and match” open source and proprietary software. Which type is “better” depends on the circumstances.

Policy Relevance

Governments should be neutral, neither favoring nor disfavoring open source. Government policy should favor competition.

Main Points

  • Open source software is produced by volunteer developers from different organizations, who share code to create software distributed for free or at low cost.
  • Open source software is growing rapidly, and dominates some niches in the market; important open source programs include Apache and Linux.
  • Society would benefit if software were distributed free, but then profit-motivated software developers might stop making software; open source could resolve this tension, because open source developers are volunteers, and the software is distributed at low cost.
  • The total cost of ownership of software varies widely.
    • Proprietary software costs more initially.
    • The costs to switch to open source is higher, as is the cost of open source tech support and ensuring compatibility with other services.
  • In buying software, government plays a leadership role because of its size and visibility; governments should consider the same factors as private firms, but also the benefits to society from their choice.
  • Some governments favor open source to support the local computer sector, but if the open source product is not cheaper or better, this policy does more harm than good.
  • Government should not favor either open source or proprietary software.
    • Competition between open source and proprietary software works better than mandates or subsidies.
    • Government should regulate competition so that one type does not dominate.


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