Open/free source projects are networks of developers, distributors and end-users of non-proprietary created knowledge goods. It has been argued (e.g. [2], [10], [30]) that this form of organization has some advantages over the firm or market coordination. We show that for sufficiently convex and modular projects, proprietary licences are not able to sustain sequential knowledge production which, however, can be carried out if the project is run on the open source basis. JEL Classification: D45, D83, H41.
We propose a recursive method of pricing an information good in a network of holders and demanders of this good. The prices are determined via a unique equilibrium outcome in a sequence of bilateral bargaining games that are played by connected agents. If the information is an homogenous, non-depreciating good without network effects we derive explicit formulae which elucidate the role of the link pattern among the players. Particularly, we find out that the equilibrium price is intimately related to the existence of cycles in the network: It is zero if a cycle covers the trading pair and it is proportional to the direct and indirect utility that the good generates otherwise. JEL Classification: C 78.
Each connected pair of nodes in a network can jointly produce one unit of surplus. A maximum number of linked nodes is selected in every period to bargain bilaterally over the division of the surplus, according to the protocol proposed by Rubinstein and Wolinsky (Econometrica 53 (1985), 1133-1150). All pairs, that reach an agreement, obtain the (discounted) payoffs and are removed from the network. This bargaining game has a unique subgame perfect equilibrium that induces the Dulmage-Mendelsohn decomposition (partition) of the bipartite network (of the set of nodes in this network). JEL Classification: C 78.