Development Costs and Open Source Software

This paper analyzes the effect of the development cost on an open source software enhancement that is developed by individual programmers in an Internet community. It considers a situation in which each programmer's cost of development is common knowledge but his valuation of the enhancement is his private information, with other programmers knowing about only its distribution. Depending on the distribution functions of programmers' valuations of the enhancement, a programmer with a lower development cost may have a less incentive to develop. As the development cost decreases, the enhancement may be less likely to be developed, and some programmers may be worse off.