Propriety vs. Public Domain Licensing of Software and Research Products

We study the production of knowledge when many researchers or inventors are involved, in a setting where there tensions can arise between individual public and private contributions. We first show, with the aid of a simple model, that without some kind of co-ordination, production of the public knowledge good (science or research software or database) is sub-optimal. Then we demonstrate that if "lead" researchers are able to establish a norm of contribution to the public good, a better outcome can be achieved. We show that the General Public License (GPL) used in the provision of open source software is one such mechanism. We then apply our results to the specific setting where the knowledge being produced is software or a database that will be used by academic researchers and possibly also by private firms, using as an example a product familiar to economists, econometric software. We conclude by discussing some of the ways in which pricing can ameliorate the problem of providing these products to academic researchers.