Reconciling rent-seekers and donators – the governance structure of open source

Abstract

Software developed and producedin open source projects has become an importantcompetitor in the software industry. Since itcan be downloaded for free and no wages arepaid to developers, the open source endeavorseems to rest on voluntary contributions byhobbyists. In the discussion of this puzzle twobasic patterns of argumentation stand out. Inwhat we call rent-seeker approaches, emphasisis put on the fact that although no wages arepaid to contributors, other pay-offs may turntheir effort into a profitable investment. Inwhat we call donator approaches the point ismade that many people contribute to open sourceprojects without expecting to ever receive anyindividual rewards.
We argue that the basic institutionalinnovation in open source has been the craftingof a governance structure, which enablesrent-seeking without crowding out donations.The focus of the presented analysis lies on thespecific institutional mechanisms, by which theopen source governance structure achieves toreconcile the interests of rent-seekers anddonators.