Coase's Penguin: Linux and the Nature of the Firm

Title: Coase's Penguin: Linux and the Nature of the Firm

Abstract: This research explores the phenomenon of free or open source software and its implications for the economy. It expands the observation of peer production to various layers of communication, including content, relevance, accreditation, and value-added distribution. The study suggests that peer production is more efficient than both market-based or hierarchical managerial processes in acquiring and processing information about human capital available to contribute to information production projects. It also discusses the costs of information production and exchange, and how peer production can overcome traditional objections related to incentives and the "tragedy of the commons."

Research Question: How does the phenomenon of free or open source software impact the economy, particularly in relation to information production and exchange?

Methodology: The study uses a combination of economic analysis and case studies to examine the implications of free or open source software. It expands the concept of peer production to various aspects of communication and information production, and compares it to both market-based and hierarchical processes.

Results: The research finds that peer production is more efficient in acquiring and processing information about human capital involved in information production projects. It also suggests that the primary costs of information production and exchange are physical capital costs, communication costs, human capital costs, and information input costs. The study shows how peer production can overcome traditional objections related to incentives and the "tragedy of the commons" through various mechanisms, including market-based or hierarchical integration, iterative peer production of integration, and technological clearance.

Implications: The research implies that the phenomenon of free or open source software has broad implications beyond software development, affecting various layers of communication and information production. It also suggests that peer production can be more efficient than both market-based and hierarchical processes in some information production activities. This study can help policymakers and economists better understand the implications of free or open source software and its potential impact on the economy.

Link to Article: https://arxiv.org/abs/0109077v2 Authors: arXiv ID: 0109077v2