Why do open- and closed-source productions co-exist? To address this question, the paper studies the viability of distinct systems for software development. The model shows that: (a) for low design costs of modularity, both open- and closed-source productions are viable systems; (b) closed-source production is more likely to be adopted the greater the expected rents on software; and (c) production efficiency is not a necessary condition for the stochastic stability of a system to obtain. These three results can shed light on the emergence of organizational diversity in the software industry. The paper adds to the literature in three ways: first, it considers property rights and technology as endogenous variables in the process of system design; second it argues that in producing software multiple equilibrium designs may exist; and third, it shows that, in because of high rents and low design costs of modularity, production inefficiency can be persistent. © 2012 Elsevier B.V.

Technology, property rights and organizational diversity in the software industry / Landini, Fabio. - In: STRUCTURAL CHANGE AND ECONOMIC DYNAMICS. - ISSN 0954-349X. - 23:2(2012), pp. 137-150. [10.1016/j.strueco.2012.01.003]

Technology, property rights and organizational diversity in the software industry

LANDINI, FABIO
2012

Abstract

Why do open- and closed-source productions co-exist? To address this question, the paper studies the viability of distinct systems for software development. The model shows that: (a) for low design costs of modularity, both open- and closed-source productions are viable systems; (b) closed-source production is more likely to be adopted the greater the expected rents on software; and (c) production efficiency is not a necessary condition for the stochastic stability of a system to obtain. These three results can shed light on the emergence of organizational diversity in the software industry. The paper adds to the literature in three ways: first, it considers property rights and technology as endogenous variables in the process of system design; second it argues that in producing software multiple equilibrium designs may exist; and third, it shows that, in because of high rents and low design costs of modularity, production inefficiency can be persistent. © 2012 Elsevier B.V.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11381/2822990
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