The Political Economy of Open Source Software

Steven Weber

1/01/2005
(Original Publish Date: 2000)

Coca-Cola sells bottles of soda to consumers. Consumers drink the soda (or use it in any other way they like). Some consumers, out of morbid curiosity, may read the list of ingredients on the bottle. But that list of ingredients is generic. Coca-Cola has a proprietary 'formula' that it does not and will not release. The formula is the knowledge that makes it possible for Coke to combine sugar, water, and a few other readily available ingredients in particular proportions and produce something of great value. The bubbly stuff in your glass cannot be reverse-engineered into its constituent parts. You can buy it and you can drink it, but you can't understand it in a way that would empower you to reproduce it or improve upon it and distribute your improved cola drink to the rest of the world. The economics of intellectual property rights provides a straightforward rationalization of why the Coca- Cola production 'regime' is organized in this way. The problem of intellectual property rights is about creating incentives for innovators.