Teaching Team 8

Ketaki

Mackenzie

Sean

Tommy

Economics Background

Yochai Benkler’s

“The New Open Source Economics” (video)“Coase’s Penguin, or Linux and the Nature of the Firm”

market

http://economics.blog.co.in/files/2008/03/equilibirium.JPGhttp://www.unesco-ihe.org/var/ihe/storage/images/media/images/skyscraper/20844-1-eng-GB/skyscraper_reference.jpg

firm / government

Original Transactional Frameworks

falling barriers to entry

http://economics.blog.co.in/files/2008/03/equilibirium.JPGhttp://www.unesco-ihe.org/var/ihe/storage/images/media/images/skyscraper/20844-1-eng-GB/skyscraper_reference.jpghttp://communities-dominate.blogs.com/photos/uncategorized/2007/10/28/p2pgovernance_id3929961_size480.jpg

firm / government commons basedproduction

market

How do you choose? transaction costs

market-based non-market-based

decentralized price system X(we are here)

centralized firm hierarchy government; non-profits

Benkler’s Four Transactional Frameworks

“social sharing and exchange”

commons based peer productionopen sourceX

Table from Benkler video

social production

commons based peer production

http://www.fao.org/docrep/003/X7579E/x7579e05.gifhttp://www.we-make-money-not-art.com/wow/0aasocialatatg.jpg

“What this means is that for the first timesince the Industrial Revolution, the mostimportant means, the most importantcomponents of the core economic activities … of the most advanced countries … are inthe hands of the population at large.”

- Benkler (video)

Three economic questions:

1) Why do people do it?

2) How does it work?

3) How good are the results?

Why do people do it?

benefits: social-psychological and reputation

new motivational structure

vs

http://upload.wikimedia.org/wikipedia/commons/3/32/Prisoners_dilemma.pnghttp://www.imagechef.com/ic/make.jsp?tid=Sticky+Note

How does it work?

new capabilities of communication tools

information is a public good

increasing returns to scale

http://www.flightsafrica.co.uk/blog_images/beach3.jpghttp://content.answers.com/main/content/img/investopedia/diseconomiesofscale.gif

How good are the results?

solves principal-agent problem

“practically all successful peer production systems havea robust mechanism for peer review or statisticalweeding out of contributions from agents who misjudgethemselves”

Dewey vs Lippmann