The economics of open source software for a competitive firm

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Abstract

Large quantities of software, ranging from operating systems to web servers to games, are now available as “open source software” or “free software”. In many cases, this software is backed by large profit seeking corporations such as IBM. Traditional economic analysis is used to identify the costs and benefits to firms of using open source rather than proprietary solutions, particularly in the case of the firm releasing code to the world when not obliged to do so. Examples of large companies backing open source are examined in light of the profit motive. Additionally, open source is also analyzed as a quasi-public good.