The (awesome) economics of open source (Opensource.com)

Over at Opensource.com, Red Hat's Michael Tiemann looksat open source fromthe perspective of the economic theories of Ronald Coase, who won the 1991Nobel Prize for Economics. Those theories help explain why companies likeRed Hat (and Cygnus Solutions, which Tiemann founded) have prospered evenin the face of economic arguments about why they shouldnot. "Successful open source software companies 'discover' marketswhere transaction costs far outweigh all other costs, outcompete theproprietary alternatives for all the good reasons that even the economicnay-sayers already concede (e.g., open source is simply a betterdevelopment model to create and maintain higher-quality, more rapidlyinnovative software than the finite limits of proprietary software), andthen-and this is the important bit-help clients achieve strategicobjectives using open source as a platform for their own innovation. Withopen source, better/faster/cheaper by itself is available for the low, lowprice of zero dollars.As an open source company, we don't cry about that. Instead, we look at how open source might create a new inflection point that fundamentally changes the economics of existing markets or how it might create entirely new and more valuable markets."