Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem

  title={Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem},
  author={M. Schwarz and Yuri Takhteyev},
  journal={NBER Working Paper Series},
We argue that the intrinsic inefficiency of proprietary software has historically created a space for alternative institutions that provide software as a public good. We discuss several sources of such inefficiency, focusing on one that has not been described in the literature: the underinvestment due to fear of hold-up. An inefficient hold-up occurs when a user of software must make complementary investments, when the return on such investments depends on future cooperation of the software… Expand
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