Why open source software can succeed

The paper discusses three key economic problems raised by the emergence and diffusion of Open source software: motivation, coordination, and diffusion under a dominant standard. First, the movement took off through the activity of a software development community that deliberately did not follow profit motivations. Second, a hierarchical coordination emerged without the support of an organization with proprietary rights. Third, Linux and other open source systems diffused in an environment dominated by established proprietary standards, which benefited from significant increasing returns. The paper shows that recent developments in the theory of critical mass in the diffusion of technologies with network externality may help to explain these phenomena.