TY - JOUR
T1 - Developers' incentives and open-source software licensing
T2 - GPL vs BSD
AU - Atal, Vidya
AU - Shankar, Kameshwari
PY - 2015/7/1
Y1 - 2015/7/1
N2 - One of the puzzling aspects of open-source software (OSS) development is its public good nature. Individual developers contribute to developing the software, but do not hold the copyright to appropriate its value. This raises questions regarding motives behind such effort. We provide an integrated model of developers' incentives to describe OSS development and compare restrictive OSS licenses that force all modifications to be kept open with non-restrictive OSS licenses that allow proprietary ownership of modified works. Different incentives govern effort provision at different stages of the software development process. We show that open-source licenses can provide socially valuable software when a proprietary license fails to do so. We also show that restrictive OSS licenses generate greater effort provision in the design stage of software development relative to non-restrictive licenses. Endogenizing licensing choice, we find that a project leader chooses a non-restrictive OSS license if reputational concerns drive developers' incentives, a proprietary license when there is a large population of users in the market and a restrictive OSS license if user population is small but reputational benefit is high. Our results resonate well with empirical findings and suggest additional testable implications about the relationship between licensing and software project characteristics. Finally, we also find that the market under-provides restrictive OSS licenses relative to the efficient level, suggesting the need for subsidizing restrictive licenses in some cases.
AB - One of the puzzling aspects of open-source software (OSS) development is its public good nature. Individual developers contribute to developing the software, but do not hold the copyright to appropriate its value. This raises questions regarding motives behind such effort. We provide an integrated model of developers' incentives to describe OSS development and compare restrictive OSS licenses that force all modifications to be kept open with non-restrictive OSS licenses that allow proprietary ownership of modified works. Different incentives govern effort provision at different stages of the software development process. We show that open-source licenses can provide socially valuable software when a proprietary license fails to do so. We also show that restrictive OSS licenses generate greater effort provision in the design stage of software development relative to non-restrictive licenses. Endogenizing licensing choice, we find that a project leader chooses a non-restrictive OSS license if reputational concerns drive developers' incentives, a proprietary license when there is a large population of users in the market and a restrictive OSS license if user population is small but reputational benefit is high. Our results resonate well with empirical findings and suggest additional testable implications about the relationship between licensing and software project characteristics. Finally, we also find that the market under-provides restrictive OSS licenses relative to the efficient level, suggesting the need for subsidizing restrictive licenses in some cases.
KW - developers' incentives
KW - licensing
KW - open-source software
KW - restrictive license
UR - http://www.scopus.com/inward/record.url?scp=84931079139&partnerID=8YFLogxK
U2 - 10.1515/bejeap-2014-0007
DO - 10.1515/bejeap-2014-0007
M3 - Article
AN - SCOPUS:84931079139
SN - 1935-1682
VL - 15
SP - 1381
EP - 1416
JO - B.E. Journal of Economic Analysis and Policy
JF - B.E. Journal of Economic Analysis and Policy
IS - 3
ER -