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Stacey Schneider and Open Source as a ‘Perfect Market’

October 16, 2007 in Syndicated

As I await the impending cure for writers block (today? tomorrow? next week???) I thought I would shout out to my manager, Stacey, who wrote a great post entitled “Nobel Prize Implies Open Source is A Perfect Market” – an analysis of this paper by Eric Maskin, one of the recent recipients of the Nobel Prize for Economics for his work on Mechanism Design Theory. As someone who sincerely regrets never taking an econ class, this stuff is gold.

You should read her full post, but I’ll note a couple of things. The quote she latches onto from the above-linked paper is this:

“…when discoveries are ‘sequential’ (so that each successive invention builds in an essential way on its predecessors) patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventor’s prospective profit may actually be enhanced by competition and imitation.”

The above applies specifically to patents, but the question is whether there’s any application to open source software. Stacey’s conclusion is that open source is software’s solution to creating the perfect efficient market, which is something to keep in mind the next time you hear anyone describe open source as “cancerous” or “communist” – not that anyone’s ever done that or anything…

Read Stacey’s post here