Why Open Source software can succeed

The paper discusses three key economic problems raised by the emergence of Open Source: motivation, co-ordination, and diffusion. First, the movement took off through the activity of a community that did not follow profit motivations. Second, a hierarchical co-ordination emerged without proprietary rights. Third, Open Source systems diffused in environments dominated by proprietary standards. The paper shows that recent developments in the theory of diffusion of technologies with network externality may help to explain these phenomena. A simulation model based on heterogeneous agents is developed in order to identify the relevant factors in the diffusion of the technology. (C) 2003 Elsevier Science B.V. All rights reserved.