Sunday, September 08, 2013

Coase's Penguin

The theory of the firm explains why firms exist and provides a framework for analysing where the boundaries of the firm will lie.  In itself this can be interesting as this is the arena to discuss the benefits of mergers or disposals or outsourcing.  See John Naughton at the Guardian for an introduction.

However, with Coase's Penguin:, Yochai Benkler suggests that this can also explain a new method of producign goods and services. 

"In this paper I explain that while free software is highly visible, it is in fact only one example of a much broader social-economic phenomenon. I suggest that we are seeing is the broad and deep emergence of a new, third mode of production in the digitally networked environment. I call this mode "commons-based peer-production," to distinguish it from the property- and contract-based models of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands."

Paper also available from this page. '

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