Open Source Software: The New Intellectual Property Paradigm

Intellectual Property and Open Source

Article Snapshot


Stephen M. Maurer and Suzanne Scotchmer


NBER Working Paper No. W12148; In T. Hendershott, ed., Handbook of Economics and Information Systems, pp. 285-319, Amsterdam: Elsevier, 2006


This paper reviews how open source software development works.

Policy Relevance

Open source software and traditional models each have strengths and weakness. Consumers benefit from competition between these business models.

Main Points

  • Traditional software (proprietary software) cannot be redistributed or changed by users and is sold for profit.

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

  • The reasons developers contribute to OSS include the desire to:
    • Sell goods or services related to OSS.
    • Improve software, perhaps for one’s own needs.
    • Demonstrate talent, advance education or gain other nonmonetary rewards.
    • Keep others from dominating a field.

  • OSS and proprietary software both have weaknesses. OSS is less responsive to unsophisticated users, and might not produce much relative to demand.

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