Volume 14, Number 4 (Winter 2011)
By examining several different types of open institutions including open source software, open science and open square, this paper presents a general analysis of open institutional structure that is complementary to traditional proprietary mode. We argue that open institutions are essentially about decentralized production of a collective good that relies on voluntary collaboration of highly variable human-related input that is difficult to identify ex ante. In addition to providing a general definition of open institutional structure, we submit that there are at least two necessary conditions. The first is the integration of consumers into production that provides various non-monetary incentives for the participants. The second condition is ex post voluntary participation that precludes the hold-up problem and transforms the transaction cost problem into a production model. In this sense, open institutions represent a positive approach towards externality and uncertainty.
