Open Source Software: The New Intellectual Property Paradigm

Article Source: NBER Working Paper No. W12148; In T. Hendershott, ed., Handbook of Economics and Information Systems, pp. 285-319, Amsterdam: Elsevier, 2006
Publication Date:
Time to Read: 1 minute read
Written By:

 Stephen M. Maurer

Stephen M. Maurer



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.


Key Takeaways:
  • 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.



Suzanne Scotchmer

About Suzanne Scotchmer

Suzanne Scotchmer is Professor of Economics, Professor of Law and Professor of Public Policy at the University of California, Berkeley. Her main academic interest at the moment is the economics, policy and law of innovation, including intellectual property. She also maintains an interest in economic theory and game theory, in which she has also published widely. Her graduate degrees are in economics and statistics.