| Abstract: | Collective-action problems arise in a variety of situations.Open-source software is a recent and important example. Copyrightrestrictions on open-source projects stipulate that any usermay modify the software so long as any resulting innovationis freely available to all. In economic parlance, the innovationis a public good. The economic theory of public-good provisionraises a number of important questions. Who contributes to sucha project, and who free rides? How might a social planner exploitthe interdependence of project components to encourage contributions?Under what conditions will such actions result in successfulprovision? Using a simple game-theoretic framework and recentresults from the study of equilibrium selection, we attemptto answer these questions. Under reasonable assumptions of asymmetryand less than complete information, the most efficient providerswill contribute. Contributions can be elicited by ‘integrating’the provision process when providers are sufficiently optimisticabout the success of the project. Otherwise, the social plannermay be better off ‘separating’ the components sothat individual contributions are independent of each other.The analysis yields recommendations for the leaders of open-sourceprojects and other similar collective-action problems. |
