Strategy Letter V: The Economics of Open Source

  • Joel Spolsky


When I was in college I took two intro economics courses: macroeconomics and microeconomics. Macro was full of theories like “low unemployment causes inflation” that never quite stood up to reality. But the micro stuff was both cool and useful. It was full of interesting concepts about the relationships between supply and demand that really did work. For example, if you have a competitor who lowers their prices, the demand for your product will go down unless you match them.


Open Source Open Source Software Commodity Price Open Source Project Enterprise Software 
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  1. 3.
    Dean Takahashi, Opening the Xbox: Inside Microsoft’s Plan to Unleash an Entertainment Revolution (Prima Lifestyles, 2002).Google Scholar
  2. 4.
    Netscape Communications News Release, “Netscape Communications Offers New Network Navigator Free on the Internet.”, 1999. See html.Google Scholar
  3. 5.
    Netscape Communications News Release, “MCI Selects Netscape Communications’ Secure Software for New InternetMCl Service.”, 1999. See Scholar
  4. 6.
    Charles Ferguson, High Stakes, No Prisoners: A Winner’s Tale of Greed and Glory in the Internet Wars (Crown Business, 1999).Google Scholar

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© Joel Spolsky 2004

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  • Joel Spolsky

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