<p>So suppose there is new technology $A$ that only 1 person has access to. If there are multiple firms with production technology $y=k^\alpha$ then obviously if that new technology was available to them at low/no cost, the overall productivity of society would increase (each firm has $y=Ak^\alpha$)</p>

<p>The problem is that it is likely the case that $A$ requires expenditure to make. You need some way to incentivize the production of that technology (at least in a basic neoclassical framework). So if you make it proprietary then the other firms may have to pay for it, or you can give it copyright so that only 1 firm has access to it. </p>

<p>In Romer's endogenous growth model, firms have an R&amp;D cost to produce their final good, but they have monopolistic power in the intermediate step to ensure that they can make a profit. If they didn't have this patent then they would not produce the technology. </p>

<p>There are newer/more advanced models in law &amp; economics that discuss different kinds of IP arrangements. A great question is how are things like WIkipedia so prevalent where most of the authors see no profit for their effort but they do it anyway. Ostensibly they achieve some sort of utility for it. But then they are producing a 'public good' and in that case others will freeride (so its only sustained if their utility from it is really high). </p>

CC BY-SA 3.0
2016-09-03T12:06:03.627Z
2016-09-03T12:25:52.940Z
2016-09-03T12:25:52.940Z
VCG
<p>I'm not sure how to tag this so feel free to add any tags you see as relevant.</p>

<p>The question here is about anything that uses a proprietary approach today and applying open-sourcing to it.</p>

<p>What if someone open-sourced their work in such a way that it can be used by absolutely anyone on condition they put a bit of money in to keep a project going?</p>

<p>This instead of intellectual property or copyright sometimes heavily restricting usage and where there is not necessarily a benefit to the community.</p>

<p>Hope you get the gist and please comment below for me to clarify if necessary.</p>

CC BY-SA 3.0
2016-09-01T21:15:19.640Z
This seems very speculative and hence opinion based.
Giskard
CC BY-SA 3.0
2016-09-01T21:16:24.543Z
You would also need to clarifiy what you mean by putting in a bit of money. If I make an awesome open-source software where does the money go? If someone further develops it does that count as putting in money? (They put valuable time and effort in instead.)
Giskard
CC BY-SA 3.0
2016-09-01T22:27:56.900Z
To clarify businesses could, say, pay the services of a [co-op](http://loomio.coop/) if there is more than one person working on a project. Time and effort is obviously a contribution in itself and that's why open-source shouldn't be considered as free.
James P.
CC BY-SA 3.0
2016-09-01T22:30:30.597Z
So for an old school response, look at Romer's endogenous growth model - that would say that if everyone was forced to do open source, innovation would likely get hurt.
VCG
CC BY-SA 3.0
2016-09-01T22:32:08.910Z
Will do. Is there thought the other way? As in the proprietary being detrimental? As in patent trolls for example. Maybe a middle ground is possible.
James P.
CC BY-SA 3.0
2016-09-03T03:56:48.013Z
@VCG: Could you please elaborate on your point? It would be great if you could write an answer with as detailed mathematical derivation as you see fit.
Hans
<macroeconomics><supply-and-demand><intellectual-property>
What would be the practicality of a widespread open-source approach in an economy?
James P.
# What would be the practicality of a widespread open-source approach in an economy?

(Asked by: username_0 on 2016-09-01)

I'm not sure how to tag this so feel free to add any tags you see as relevant.

The question here is about anything that uses a proprietary approach today and applying open-sourcing to it.

What if someone open-sourced their work in such a way that it can be used by absolutely anyone on condition they put a bit of money in to keep a project going?

This instead of intellectual property or copyright sometimes heavily restricting usage and where there is not necessarily a benefit to the community.

Hope you get the gist and please comment below for me to clarify if necessary.

**Tags:** macroeconomics, supply-and-demand, intellectual-property
> **Comments:**
> **username_1**: This seems very speculative and hence opinion based.  
> **username_1**: You would also need to clarifiy what you mean by putting in a bit of money. If I make an awesome open-source software where does the money go? If someone further develops it does that count as putting in money? (They put valuable time and effort in instead.)  
> **username_0**: To clarify businesses could, say, pay the services of a [co-op](http://loomio.coop/) if there is more than one person working on a project. Time and effort is obviously a contribution in itself and that's why open-source shouldn't be considered as free.  
> **username_2**: So for an old school response, look at Romer's endogenous growth model - that would say that if everyone was forced to do open source, innovation would likely get hurt.  
> **username_0**: Will do. Is there thought the other way? As in the proprietary being detrimental? As in patent trolls for example. Maybe a middle ground is possible.  
> **username_3**: @VCG: Could you please elaborate on your point? It would be great if you could write an answer with as detailed mathematical derivation as you see fit.  

---

## 1 answers

### Answer by username_2 on 2016-09-03. Score: 1

So suppose there is new technology $A$ that only 1 person has access to. If there are multiple firms with production technology $y=k^\alpha$ then obviously if that new technology was available to them at low/no cost, the overall productivity of society would increase (each firm has $y=Ak^\alpha$)

The problem is that it is likely the case that $A$ requires expenditure to make. You need some way to incentivize the production of that technology (at least in a basic neoclassical framework). So if you make it proprietary then the other firms may have to pay for it, or you can give it copyright so that only 1 firm has access to it.

In Romer's endogenous growth model, firms have an R&D cost to produce their final good, but they have monopolistic power in the intermediate step to ensure that they can make a profit. If they didn't have this patent then they would not produce the technology.

There are newer/more advanced models in law & economics that discuss different kinds of IP arrangements. A great question is how are things like WIkipedia so prevalent where most of the authors see no profit for their effort but they do it anyway. Ostensibly they achieve some sort of utility for it. But then they are producing a 'public good' and in that case others will freeride (so its only sustained if their utility from it is really high).


---

