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Coase's Penguin, Or, Linux and the Nature of the Firm [pdf]

https://www.benkler.org/CoasesPenguin.PDF
15•loughnane•1mo ago

Comments

w10-1•1mo ago
This is the 2002 law article, before the 2006 book on networks that reflected early interest in network effects, arguing that open-source is an emergent mode of production. The same analysis could arguably be applied to the creator or influencer economy. It aged well.

  https://en.wikipedia.org/wiki/Yochai_Benkler
But he adopting the techniques of transaction cost economics (TCE) while at the same time posing straw man TCE claims (e.g., that TCE says there are only integrated firms and markets). TCE says transaction costs matter most in determining economies of transactions at high scale, and its methods can show how a broad variety of costs end up shaping activity and institutions. It also explains which innovations are disruptive (surprise: they change the transaction costs) and thus how digitalization has had such a huge impact so quickly.

The TCE analysis has become second nature in business strategy, but surprisingly rare in policy circles, its intended audience.

And his analysis in hindsight is a bit wishful. Roughly speaking, while open-source reduces coordination costs, it doesn't reduce the underlying complexity. The big open-source projects get that way through major corporate sponsorship, and they run with very clear dictatorial/oligarchic or bureaucratic decision-making if they evolve.

One of the principles of TCE methodology is to compare not ideal with real, but two actual and viable forms of organization. In this case he's projected ideal benefits without any of the real costs. That was forgivable in 2002 or even 2006, but it would be malpractice now.

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