New Perspectives on Public Goods Production: Policy Implications of Open Source Software

Globally, the rapid rise of Open Source Software (OSS) development has drawn the intense attention of the public sector as well as the private sector. For a variety of policy reasons, governments throughout the world are now adopting various legislative and administrative strategies that support the development of OSS. This article reveals some empirical data regarding the trend of evolving OSS policies globally. Additionally, this article investigates why so many governments are considering support of OSS development, and weighs the pros and cons of such policies. The ultimate conclusion is that when two systems are equally suitable, governments may reasonably choose OSS over proprietary software because software industry market failures may justify such support of OSS development. While governments considering supporting OSS are primarily concerned with significant switching costs and incompatibility problems, OSS is actually superior to proprietary software because it increases compatibility and consequently decreases switching costs in the long term. Further, OSS will not only help developing countries build their information technology capabilities, but will also promote competition in the software market.