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We typically reduce all of economics to supply and demand, but it could be equally well formulated in terms of cost and benefit. Every system of production, whether it is a company, a market, or an open source community, has its costs. On one end of this spectrum, firms work because they can balance relatively lower costs of command-and-control structures relative to a higher cost market. On the other end, commons-based peer production such as open source projects can have lower costs than either firms or markets in a networked environment, where communication of participants and distribution of goods are far lower than we experienced in the industrial economy that those of us who are voting age and older experienced for most of our lives. It isn’t intuitive to us because we’re not used to having to live and work in space, having spent most of our lives on the ground. I’m here to tell you that the laws of physics still apply. It’s just our intuitions about them that need to be adjusted.

Comments

1. gavin baker - october 31st, 2007 at 12:30 pm

This is my favorite post of the series. Thanks, Michael, for an accessible introduction that makes me want to dig even deeper into Coase and Benkler.

I’m a bit disappointed in the conclusion, though. I had my hopes up for a smoking-gun ending: a prescription for higher ed on the basis of what we know about commons-based peer production.

I’ve read plenty of such prescriptions (and dashed off “Rx” a few times myself), but they inevitably seem to fail to connect the dots. I was struck by the question “Open source works in practice, but does it work in theory?” It may sound academic, but it’s actually quite practical. To fully leverage these forces, we need a complete cycle from practice to theory to practice. There are plenty of practitioners, and there’s good theory (albeit not widely-enough understood), but the chain frequently fails when attempting to extract practical knowledge — well-formed prescriptions — from the theory.

Most of the attempts to do so boil down to something like “universities should support FOSS because it’s the right thing to do”. Perhaps ironically, it seems that many of academia’s FOSS practitioners purposefully ignore theory, reducing the motivation to use or produce FOSS to “it seemed like a good idea (it might save money, etc.” or some sort of imitation. As Gary Schwartz wrote in his post for the series: “Whereas many university people enjoy a spiritual affinity for open source software, our interest is more pragmatic.” To stereotype, one group’s motivation is religious, with no concern for practicality; another group’s motivation is just to get through the fiscal year without going over budget, with no concern for bleeding-heart causes. We’ve got theory that explains and reconciles the forces — but nobody’s applying it.

To stick with the space metaphor: If someone was designing a rocket, no engineer would mimic previous designs “because it’s the right thing to do”. Similarly, no engineer would mimic previous designs “because it seems to work”. We would expect the practitioners to apply a theoretical foundation. If the president walked in to NASA and demanded, “Explain why this will work,” there’d better be a solid explanation — and I’d expect the aerospace engineers to be able to deliver it. But if the president went to NASA’s software engineers and asked the same question about their open source projects, I doubt sincerely they could give a complete, succinct, coherent, convincing explanation. (Not to pick on NASA.) It really seems like the practice of FOSS isn’t theory, applied — it’s guesswork or beliefs . That’s not because the theory isn’t there (as this post expertly demonstrates); it’s because the theory isn’t being applied. How do we change that?

Questions & Answers

differentiate between demand and supply giving examples
Lambiv Reply
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Lambiv
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Lambiv
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appreciation
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Lindiwe Reply
In economics, a perfect market refers to a theoretical construct where all participants have perfect information, goods are homogenous, there are no barriers to entry or exit, and prices are determined solely by supply and demand. It's an idealized model used for analysis,
Ezea
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other things being equal
AI-Robot
When MP₁ becomes negative, TP start to decline. Extuples Suppose that the short-run production function of certain cut-flower firm is given by: Q=4KL-0.6K2 - 0.112 • Where is quantity of cut flower produced, I is labour input and K is fixed capital input (K-5). Determine the average product of lab
Kelo
Extuples Suppose that the short-run production function of certain cut-flower firm is given by: Q=4KL-0.6K2 - 0.112 • Where is quantity of cut flower produced, I is labour input and K is fixed capital input (K-5). Determine the average product of labour (APL) and marginal product of labour (MPL)
Kelo
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what is monopoly mean?
Habtamu Reply
What is different between quantity demand and demand?
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Quantity demanded refers to the specific amount of a good or service that consumers are willing and able to purchase at a give price and within a specific time period. Demand, on the other hand, is a broader concept that encompasses the entire relationship between price and quantity demanded
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Economic growth as an increase in the production and consumption of goods and services within an economy.but Economic development as a broader concept that encompasses not only economic growth but also social & human well being.
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Jabir
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Asui
it is a curve that we get after connecting the pareto optimal combinations of two consumers after their mutually beneficial trade offs
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In economics, the contract curve refers to the set of points in an Edgeworth box diagram where both parties involved in a trade cannot be made better off without making one of them worse off. It represents the Pareto efficient allocations of goods between two individuals or entities, where neither p
Cornelius
In economics, the contract curve refers to the set of points in an Edgeworth box diagram where both parties involved in a trade cannot be made better off without making one of them worse off. It represents the Pareto efficient allocations of goods between two individuals or entities,
Cornelius
Suppose a consumer consuming two commodities X and Y has The following utility function u=X0.4 Y0.6. If the price of the X and Y are 2 and 3 respectively and income Constraint is birr 50. A,Calculate quantities of x and y which maximize utility. B,Calculate value of Lagrange multiplier. C,Calculate quantities of X and Y consumed with a given price. D,alculate optimum level of output .
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Answer
Feyisa
c
Jabir
the market for lemon has 10 potential consumers, each having an individual demand curve p=101-10Qi, where p is price in dollar's per cup and Qi is the number of cups demanded per week by the i th consumer.Find the market demand curve using algebra. Draw an individual demand curve and the market dema
Gsbwnw Reply
suppose the production function is given by ( L, K)=L¼K¾.assuming capital is fixed find APL and MPL. consider the following short run production function:Q=6L²-0.4L³ a) find the value of L that maximizes output b)find the value of L that maximizes marginal product
Abdureman
types of unemployment
Yomi Reply
What is the difference between perfect competition and monopolistic competition?
Mohammed
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Source:  OpenStax, The impact of open source software on education. OpenStax CNX. Mar 30, 2009 Download for free at http://cnx.org/content/col10431/1.7
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