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126-402: An open platform does not mean it is open source , however most open platforms have multiple implementations of APIs. For example, Common Gateway Interface (CGI) is implemented by open source web servers as well as Microsoft Internet Information Server (IIS). An open platform can consist of software components or modules that are either proprietary or open source or both. It can also exist as

252-529: A Creative Commons license. The resulting cultural product is then available to download free (generally accessible) to anyone with an Internet connection. Older, analog technologies such as the telephone or television have limitations on the kind of interaction users can have. Through various technologies such as peer-to-peer networks and blogs , cultural producers can take advantage of vast social networks to distribute their products. As opposed to traditional media distribution, redistributing digital media on

378-720: A derivative work —such as a copy of a software program modified to fix a bug or add a feature, or a remix of a song—but are unable or unwilling to pay the copyright holder for the right to do so. Being organized as effectively a " consumers' cooperative ", open source eliminates some of the access costs of consumers and creators of derivative works by reducing the restrictions of copyright. Basic economic theory predicts that lower costs would lead to higher consumption and also more frequent creation of derivative works. Organizations such as Creative Commons host websites where individuals can file for alternative "licenses", or levels of restriction, for their works. These self-made protections free

504-444: A state-owned company . Monopolies may be naturally occurring due to limited competition because the industry is resource intensive and requires substantial costs to operate (e.g., certain railroad systems). Market structure is determined by following factors: In economics, the idea of monopolies is important in the study of management structures, which directly concerns normative aspects of economic competition, and provides

630-405: A " de jure monopoly") is a form of coercive monopoly , in which a government grants exclusive privilege to a private individual or company to be the sole provider of a commodity. Monopoly may be granted explicitly, as when potential competitors are excluded from the market by a specific law , or implicitly, such as when the requirements of an administrative regulation can only be fulfilled by

756-509: A PC market are price takers. The price is set by the interaction of demand and supply at the market or aggregate level. Individual companies simply take the price determined by the market and produce that quantity of output that maximizes the company's profits. If a PC company attempted to increase prices above the market level all its customers would abandon the company and purchase at the market price from other companies. A monopoly has considerable although not unlimited market power. A monopoly has

882-739: A boarding pass before boarding an airplane. Most travelers assume that this practice is strictly a matter of security. However, a primary purpose in requesting photographic identification is to confirm that the ticket purchaser is the person about to board the airplane and not someone who has repurchased the ticket from a discount buyer. The inability to prevent resale is the largest obstacle to successful price discrimination. Companies have, however, developed numerous methods to prevent resale. For example, universities require that students show identification before entering sporting events. Governments may make it illegal to resell tickets or products. In Boston, Red Sox baseball tickets can only be resold legally to

1008-598: A company cannot charge more than the market price. Any market structure characterized by a downward sloping demand curve has market power – monopoly, monopolistic competition and oligopoly. The only market structure that has no market power is perfect competition. A company wishing to practice price discrimination must be able to prevent middlemen or brokers from acquiring the consumer surplus for themselves. The company accomplishes this by preventing or limiting resale. Many methods are used to prevent resale. For instance, persons are required to show photographic identification and

1134-482: A computer program in which the source code is available to the general public for use for any (including commercial) purpose, or modification from its original design. Open-source code is meant to be a collaborative effort, where programmers improve upon the source code and share the changes within the community. Code is released under the terms of a software license . Depending on the license terms, others may then download, modify, and publish their version (fork) back to

1260-422: A computer program in which the source code is available to the general public for use or modification from its original design. Code is released under the terms of a software license . Depending on the license terms, others may then download, modify, and publish their version (fork) back to the community. Many large formal institutions have sprung up to support the development of the open-source movement, including

1386-426: A consumer's tax return has information that can be used to charge customers based on an estimate of their ability to pay. In second degree price discrimination or quantity discrimination customers are charged different prices based on how much they buy. There is a single price schedule for all consumers but the prices vary depending on the quantity of the good bought. The theory of second degree price discrimination

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1512-438: A consumer's willingness to pay is rarely available. Sellers tend to rely on secondary information such as where a person lives (postal codes); for example, catalog retailers can use mail high-priced catalogs to high-income postal codes. First degree price discrimination most frequently occurs in regard to professional services or in transactions involving direct buyer-seller negotiations. For example, an accountant who has prepared

1638-549: A customer's willingness to buy a good is difficult. Asking consumers directly is fruitless: consumers do not know, and to the extent they do they are reluctant to share that information with marketers. The two main methods for determining willingness to buy are observation of personal characteristics and consumer actions. As noted information about where a person lives (postal codes), how the person dresses, what kind of car he or she drives, occupation, and income and spending patterns can be helpful in classifying. The price of monopoly

1764-492: A different price. Third degree price discrimination is the most prevalent type. There are three conditions that must be present for a company to engage in successful price discrimination. First, the company must have market power. Second, the company must be able to sort customers according to their willingness to pay for the good. Third, the firm must be able to prevent resell. A company must have some degree of market power to practice price discrimination. Without market power

1890-409: A high rate of return or monopoly prices and might represent risk premiums . Monopolies derive their market power from barriers to entry – circumstances that prevent or greatly impede a potential competitor's ability to compete in a market. There are three major types of barriers to entry: economic, legal, and deliberate. In addition to barriers to entry and competition, barriers to exit may be

2016-433: A higher price than P ∗ {\displaystyle P^{*}} and those who will not pay P ∗ {\displaystyle P^{*}} but would buy at a lower price. A price discrimination strategy is to charge less price sensitive buyers a higher price and the more price sensitive buyers a lower price. Thus additional revenue is generated from two sources. The basic problem

2142-420: A lack of economic competition to produce a particular thing, a lack of viable substitute goods , and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit . The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law,

2268-515: A market and what does not are relevant distinctions to make in economic analysis. In a general equilibrium context, a good is a specific concept including geographical and time-related characteristics. Most studies of market structure relax a little their definition of a good, allowing for more flexibility in the identification of substitute goods. A monopoly has at least one of these five characteristics: Market power can be estimated with Lerner index . High profit margins might not correspond to

2394-475: A market. A monopsony is a market situation in which there is only one buyer. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and oligopolies are all situations in which one or a few entities have market power and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort

2520-416: A maximum value then continuously decreases until total revenue is again zero. Total revenue has its maximum value when the slope of the total revenue function is zero. The slope of the total revenue function is marginal revenue. So the revenue maximizing quantity and price occur when MR = 0 {\displaystyle {\text{MR}}=0} . For example, assume that the monopoly's demand function

2646-508: A meeting held at Palo Alto, California , in reaction to Netscape 's announcement in January 1998 of a source code release for Navigator . Linus Torvalds gave his support the following day, and Phil Hughes backed the term in Linux Journal . Richard Stallman , the founder of the free software foundation (FSF) in 1985, quickly decided against endorsing the term. The FSF's goal was to promote

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2772-466: A monopolist to increase its profit by charging higher prices for identical goods to those who are willing or able to pay more. For example, most economic textbooks cost more in the United States than in developing countries like Ethiopia . In this case, the publisher is using its government-granted copyright monopoly to price discriminate between the generally wealthier American economics students and

2898-403: A monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with unfair price raises . Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market). A monopoly may also have monopsony control of a sector of

3024-451: A monopoly is that the monopoly has a downward-sloping demand curve rather than the "perceived" perfectly elastic curve of the PC company. Practically all the variations mentioned above relate to this fact. If there is a downward-sloping demand curve then by necessity there is a distinct marginal revenue curve. The implications of this fact are best made manifest with a linear demand curve. Assume that

3150-509: A monopoly. Often, a natural monopoly is the outcome of an initial rivalry between several competitors. An early market entrant that takes advantage of the cost structure and can expand rapidly can exclude smaller companies from entering and can drive or buy out other companies. A natural monopoly suffers from the same inefficiencies as any other monopoly. Left to its own devices, a profit-seeking natural monopoly will produce where marginal revenue equals marginal costs. Regulation of natural monopolies

3276-460: A more commercially minded position. In addition, the ambiguity of the term "free software" was seen as discouraging business adoption. However, the ambiguity of the word "free" exists primarily in English as it can refer to cost. The group included Christine Peterson , Todd Anderson, Larry Augustin , Jon Hall , Sam Ockman , Michael Tiemann and Eric S. Raymond . Peterson suggested "open source" at

3402-447: A more elastic demand for movies than do young adults because they generally have more free time. Thus theaters will offer discount tickets to seniors. Assume that by a uniform pricing system the monopolist would sell five units at a price of $ 10 per unit. Assume that his marginal cost is $ 5 per unit. Total revenue would be $ 50, total costs would be $ 25 and profits would be $ 25. If the monopolist practiced price discrimination he would sell

3528-448: A more nuanced position than corporations have traditionally sought. Instead of seeing intellectual property law as an expression of instrumental rules intended to uphold either natural rights or desirable outcomes, an argument for OSC takes into account diverse goods (as in "the Good life" ) and ends. Sites such as ccMixter offer up free web space for anyone willing to license their work under

3654-496: A more price inelastic demand and a relatively lesser price to the group with a more elastic demand. Examples of third degree price discrimination abound. Airlines charge higher prices to business travelers than to vacation travelers. The reasoning is that the demand curve for a vacation traveler is relatively elastic while the demand curve for a business traveler is relatively inelastic. Any determinant of price elasticity of demand can be used to segment markets. For example, seniors have

3780-440: A part of closed platform, such as CGI, which is an open platform, while many servers that implement CGI also have other proprietary parts that are not part of the open platform. An open platform implies that the vendor allows, and perhaps supports, the ability to do this. Using an open platform a developer could add features or functionality that the platform vendor had not completed or had not conceived of. An open platform allows

3906-421: A perfectly elastic demand curve meaning that total revenue is proportional to output. Thus the total revenue curve for a competitive company is a ray with a slope equal to the market price. A competitive company can sell all the output it desires at the market price. For a monopoly to increase sales it must reduce price. Thus the total revenue curve for a monopoly is a parabola that begins at the origin and reaches

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4032-402: A platform's openness in four aspects and gave example platforms. This computing article is a stub . You can help Misplaced Pages by expanding it . Open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open source model

4158-477: A price increase, price elasticity tends to increase, and in the optimum case above it will be greater than one for most customers. A company maximizes profit by selling where marginal revenue equals marginal cost. A company that does not engage in price discrimination will charge the profit maximizing price, P ∗ {\displaystyle P^{*}} , to all its customers. In such circumstances there are customers who would be willing to pay

4284-478: A product (or service) of economic value, which they make available to contributors and noncontributors alike." This definition captures multiple instances, all joined by similar principles. For example, all of the elements – goods of economic value, open access to contribute and consume, interaction and exchange, purposeful yet loosely coordinated work – are present in an open-source software project, in Misplaced Pages, or in

4410-527: A product's design or blueprint, and universal redistribution of that design or blueprint. Before the phrase open source became widely adopted, developers and producers used a variety of other terms, such as free software , shareware , and public domain software . Open source gained hold with the rise of the Internet. The open-source software movement arose to clarify copyright , licensing , domain , and consumer issues. Generally, open source refers to

4536-406: A product's design or blueprint, and universal redistribution of that design or blueprint. Before the phrase open source became widely adopted, developers and producers used a variety of other terms. Open source gained hold in part due to the rise of the Internet. The open-source software movement arose to clarify copyright , licensing , domain , and consumer issues. An open-source license

4662-457: A product, movie or CD. By removing the cultural middlemen, messageboards help speed the flow of information and exchange of ideas. OpenDocument is an open document file format for saving and exchanging editable office documents such as text documents (including memos, reports, and books), spreadsheets , charts, and presentations. Organizations and individuals that store their data in an open format such as OpenDocument avoid being locked into

4788-420: A product. Copyright creates a monopoly so that the price charged to consumers can be significantly higher than the marginal cost of production. This allows the author to recoup the cost of making the original work. Copyright thus creates access costs for consumers who value the work more than the marginal cost but less than the initial production cost. Access costs also pose problems for authors who wish to create

4914-411: A proprietary license and charge for copies, or an open license. Some goods which require large amounts of professional research and development, such as the pharmaceutical industry (which depends largely on patents, not copyright for intellectual property protection) are almost exclusively proprietary, although increasingly sophisticated technologies are being developed on open-source principles. There

5040-524: A real time conversation online) and image uploading. Some messageboards use phpBB , which is a free open-source package. Where blogs are more about individual expression and tend to revolve around their authors, messageboards are about creating a conversation amongst its users where information can be shared freely and quickly. Messageboards are a way to remove intermediaries from everyday life—for instance, instead of relying on commercials and other forms of advertising, one can ask other users for frank reviews of

5166-474: A requirement to preserve the name of the authors and a copyright statement within the code, or a requirement to redistribute the licensed software only under the same license (as in a copyleft license). One popular set of open-source software licenses are those approved by the Open Source Initiative (OSI) based on their Open Source Definition (OSD). Social and political views have been affected by

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5292-424: A single agent or entrepreneur, the optimal decision is to equate the marginal cost and marginal revenue of production. Nonetheless, a pure monopoly can – unlike a competitive company – alter the market price for its own convenience: a decrease of production results in a higher price. In the economics' jargon, it is said that pure monopolies have "a downward-sloping demand". An important consequence of such behaviour

5418-472: A single software vendor, leaving them free to switch software if their current vendor goes out of business, raises their prices, changes their software, or changes their licensing terms to something less favorable. Open-source movie production is either an open call system in which a changing crew and cast collaborate in movie production, a system in which the result is made available for re-use by others or in which exclusively open-source products are used in

5544-671: A software format, is published and made available to the public, enabling anyone to copy, modify and redistribute the hardware and source code without paying royalties or fees. Open-source hardware evolves through community cooperation. These communities are composed of individual hardware/software developers, hobbyists, as well as very large companies. Examples of open-source hardware initiatives are: Some publishers of open-access journals have argued that data from food science and gastronomy studies should be freely available to aid reproducibility . A number of people have published creative commons licensed recipe books. An open-source robot

5670-482: A source of market power. Barriers to exit are market conditions that make it difficult or expensive for a company to end its involvement with a market. High liquidation costs are a primary barrier to exiting. Market exit and shutdown are sometimes separate events. The decision of whether to shut down or operate is not affected by exit barriers. A company will shut down if the price falls below minimum average variable costs. While monopoly and perfect competition represent

5796-402: A substitute. Contrary to common misconception , monopolists do not try to sell items for the highest possible price, nor do they try to maximize profit per unit, but rather they try to maximize total profit. A natural monopoly is an organization that experiences increasing returns to scale over the relevant range of output and relatively high fixed costs. A natural monopoly occurs where

5922-416: A technology that makes webpages easily updatable with no understanding of design, code, or file transfer required. While corporations, political campaigns and other formal institutions have begun using these tools to distribute information, many blogs are used by individuals for personal expression, political organizing, and socializing. Some, such as LiveJournal or WordPress , use open-source software that

6048-405: A user forum or community. They can also be present in a commercial website that is based on user-generated content . In all of these instances of open collaboration, anyone can contribute and anyone can freely partake in the fruits of sharing, which are produced by interacting participants who are loosely coordinated. An annual conference dedicated to the research and practice of open collaboration

6174-413: A vote, and the winner was announced at a press conference the same evening. Some economists agree that open-source is an information good or "knowledge good" with original work involving a significant amount of time, money, and effort. The cost of reproducing the work is low enough that additional users may be added at zero or near zero cost – this is referred to as the marginal cost of

6300-406: Is P = 50 − 2 Q {\displaystyle P=50-2Q} . The total revenue function would be TR = 50 Q − 2 Q 2 {\displaystyle {\text{TR}}=50Q-2Q^{2}} and marginal revenue would be 50 − 4 Q {\displaystyle 50-4Q} . Setting marginal revenue equal to zero we have So

6426-401: Is peer production , with products such as source code, blueprints , and documentation freely available to the public. The open-source movement in software began as a response to the limitations of proprietary code. The model is used for projects such as in open-source appropriate technology , and open-source drug discovery. The open-source model for software development inspired the use of

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6552-409: Is a robot whose blueprints, schematics, or source code are released under an open-source model Free and open-source software (FOSS) or free/libre and open-source software (FLOSS) is openly shared source code that is licensed without any restrictions on usage, modification, or distribution. Confusion persists about this definition because the "free", also known as "libre", refers to the freedom of

6678-502: Is a consumer is willing to buy only a certain quantity of a good at a given price. Companies know that consumer's willingness to buy decreases as more units are purchased. The task for the seller is to identify these price points and to reduce the price once one is reached in the hope that a reduced price will trigger additional purchases from the consumer. For example, sell in unit blocks rather than individual units. In third degree price discrimination or multi-market price discrimination

6804-561: Is a decentralized software development model that encourages open collaboration . A main principle of open source software development is peer production , with products such as source code, blueprints , and documentation freely available to the public. The open source movement in software began as a response to the limitations of proprietary code . The model is used for projects such as in open source appropriate technology , and open source drug discovery. Open source promotes universal access via an open-source or free license to

6930-400: Is a theoretical construct, advances in information technology and micromarketing may bring it closer to the realm of possibility. Partial price discrimination can cause some customers who are inappropriately pooled with high price customers to be excluded from the market. For example, a poor student in the U.S. might be excluded from purchasing an economics textbook at the U.S. price, which

7056-414: Is a type of license for computer software and other products that allows the source code , blueprint or design to be used, modified or shared (with or without modification) under defined terms and conditions. This allows end users and commercial companies to review and modify the source code, blueprint or design for their own customization, curiosity or troubleshooting needs. Open-source licensed software

7182-681: Is defined by the total gains from trade, the monopoly setting is less efficient than perfect competition. It is often argued that monopolies tend to become less efficient and less innovative over time, becoming "complacent", because they do not have to be efficient or innovative to compete in the marketplace. Sometimes this very loss of psychological efficiency can increase a potential competitor's value enough to overcome market entry barriers, or provide incentive for research and investment into new alternatives. The theory of contestable markets argues that in some circumstances (private) monopolies are forced to behave as if there were competition because of

7308-422: Is dominant. A government-granted monopoly or legal monopoly , by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group . Patents , copyrights , and trademarks are sometimes used as examples of government-granted monopolies. The government may also reserve the venture for itself, thus forming a government monopoly , for example with

7434-404: Is evidence that open-source development creates enormous value. For example, in the context of open-source hardware design, digital designs are shared for free and anyone with access to digital manufacturing technologies (e.g. RepRap 3D printers) can replicate the product for the cost of materials. The original sharer may receive feedback and potentially improvements on the original design from

7560-417: Is important information for one to remember when considering the monopoly model diagram (and its associated conclusions) displayed here. The result that monopoly prices are higher, and production output lesser, than a competitive company follow from a requirement that the monopoly not charge different prices for different customers. That is, the monopoly is restricted from engaging in price discrimination (this

7686-401: Is known as the "revolution in monopoly theory". A monopolist can extract only one premium, and getting into complementary markets does not pay. That is, the total profits a monopolist could earn if it sought to leverage its monopoly in one market by monopolizing a complementary market are equal to the extra profits it could earn anyway by charging more for the monopoly product itself. However,

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7812-401: Is mostly available free of charge, though this does not necessarily have to be the case. Licenses which only permit non-commercial redistribution or modification of the source code for personal use only are generally not considered as open-source licenses. However, open-source licenses may have some restrictions, particularly regarding the expression of respect to the origin of software, such as

7938-400: Is not perfect. Regulators must estimate average costs. Companies have a reduced incentive to lower costs. Regulation of this type has not been limited to natural monopolies. Average-cost pricing does also have some disadvantages. By setting price equal to the intersection of the demand curve and the average total cost curve, the firm's output is allocatively inefficient as the price is less than

8064-443: Is open to the public and can be modified by users to fit their own tastes. Whether the code is open or not, this format represents a nimble tool for people to borrow and re-present culture; whereas traditional websites made the illegal reproduction of culture difficult to regulate, the mutability of blogs makes "open sourcing" even more uncontrollable since it allows a larger portion of the population to replicate material more quickly in

8190-400: Is problematic. Fragmenting such monopolies is by definition inefficient. The most frequently used methods dealing with natural monopolies are government regulations and public ownership. Government regulation generally consists of regulatory commissions charged with the principal duty of setting prices. Natural monopolies are synonymous with what is called "single-unit enterprise", a term which

8316-711: Is software which source code is published and made available to the public, enabling anyone to copy, modify and redistribute the source code without paying royalties or fees. LibreOffice and the GNU Image Manipulation Program are examples of open source software. As they do with proprietary software, users must accept the terms of a license when they use open source software—but the legal terms of open source licenses differ dramatically from those of proprietary licenses. Open-source code can evolve through community cooperation. These communities are composed of individual programmers as well as large companies. Some of

8442-448: Is termed first degree price discrimination , such that all customers are charged the same amount). If the monopoly were permitted to charge individualised prices (this is termed third degree price discrimination ), the quantity produced, and the price charged to the marginal customer, would be identical to that of a competitive company, thus eliminating the deadweight loss ; however, all gains from trade (social welfare) would accrue to

8568-617: Is that typically a monopoly selects a higher price and lesser quantity of output than a price-taking company; again, less is available at a higher price. A monopoly chooses that price that maximizes the difference between total revenue and total cost. The basic markup rule (as measured by the Lerner index ) can be expressed as P − M C P = − 1 E d {\displaystyle {\frac {P-MC}{P}}={\frac {-1}{E_{d}}}} , where E d {\displaystyle E_{d}}

8694-590: Is the International Symposium on Wikis and Open Collaboration (OpenSym, formerly WikiSym). As per its website, the group defines open collaboration as "collaboration that is egalitarian (everyone can join, no principled or artificial barriers to participation exist), meritocratic (decisions and status are merit-based rather than imposed) and self-organizing (processes adapt to people rather than people adapt to pre-defined processes)." Open source promotes universal access via an open-source or free license to

8820-560: Is the only market form in which price discrimination would be impossible (a perfectly competitive company has a perfectly elastic demand curve and has no market power). There are three forms of price discrimination. First degree price discrimination charges each consumer the maximum price the consumer is willing to pay. Second degree price discrimination involves quantity discounts. Third degree price discrimination involves grouping consumers according to willingness to pay as measured by their price elasticities of demand and charging each group

8946-535: Is the price elasticity of demand the firm faces. The markup rules indicate that the ratio between profit margin and the price is inversely proportional to the price elasticity of demand. The implication of the rule is that the more elastic the demand for the product the less pricing power the monopoly has. Market power is the ability to increase the product's price above marginal cost without losing all customers. Perfectly competitive (PC) companies have zero market power when it comes to setting prices. All companies of

9072-517: Is to identify customers by their willingness to pay. The purpose of price discrimination is to transfer consumer surplus to the producer. Consumer surplus is the difference between the value of a good to a consumer and the price the consumer must pay in the market to purchase it. Price discrimination is not limited to monopolies. Market power is a company's ability to increase prices without losing all its customers. Any company that has market power can engage in price discrimination. Perfect competition

9198-441: Is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any considerable time together. The one is upon every occasion the highest which can be squeezed out of the buyers, or which it is supposed they will consent to give; the other is the lowest which the sellers can commonly afford to take, and at

9324-580: The Apache Software Foundation , which supports community projects such as the open-source framework Apache Hadoop and the open-source HTTP server Apache HTTP . The sharing of technical information predates the Internet and the personal computer considerably. For instance, in the early years of automobile development a group of capital monopolists owned the rights to a 2-cycle gasoline-engine patent originally filed by George B. Selden . By controlling this patent, they were able to monopolize

9450-550: The peer production community. Many open-source projects have a high economic value. According to the Battery Open Source Software Index (BOSS), the ten economically most important open-source projects are: The rank given is based on the activity regarding projects in online discussions, on GitHub, on search activity in search engines and on the influence on the labour market. Alternative arrangements have also been shown to result in good creation outside of

9576-480: The "Open Source Summit", the event was attended by the leaders of many of the most important free and open-source projects, including Linus Torvalds, Larry Wall , Brian Behlendorf , Eric Allman , Guido van Rossum , Michael Tiemann , Paul Vixie , Jamie Zawinski , and Eric Raymond. At that meeting, alternatives to the term "free software" were discussed. Tiemann argued for "sourceware" as a new term, while Raymond argued for "open source." The assembled developers took

9702-526: The Internet can be virtually costless. Technologies such as BitTorrent and Gnutella take advantage of various characteristics of the Internet protocol ( TCP/IP ) in an attempt to totally decentralize file distribution. Open-source ethics is split into two strands: Irish philosopher Richard Kearney has used the term "open-source Hinduism " to refer to the way historical figures such as Mohandas Gandhi and Swami Vivekananda worked upon this ancient tradition. Open-source journalism formerly referred to

9828-403: The average cost of production "declines throughout the relevant range of product demand". The relevant range of product demand is where the average cost curve is below the demand curve. When this situation occurs, it is always more efficient for one large company to supply the market than multiple smaller companies; in fact, absent government intervention in such markets, will naturally evolve into

9954-429: The basis for topics such as industrial organization and economics of regulation . There are four basic types of market structures in traditional economic analysis: perfect competition , monopolistic competition , oligopoly and monopoly. A monopoly is a structure in which a single supplier produces and sells a given product or service. If there is a single seller in a certain market and there are no close substitutes for

10080-467: The case that at the profit-maximizing quantity MR and MC are less than price, which further implies that a monopoly produces less quantity at a higher price than if the market were perfectly competitive. The fact that a monopoly has a downward-sloping demand curve means that the relationship between total revenue and output for a monopoly is much different from that of competitive companies. Total revenue equals price times quantity. A competitive company has

10206-409: The community. The rise of open-source culture in the 20th century resulted from a growing tension between creative practices that involve require access to content that is often copyrighted , and restrictive intellectual property laws and policies governing access to copyrighted content. The two main ways in which intellectual property laws became more restrictive in the 20th century were extensions to

10332-679: The developer to change existing functionality, as the specifications are publicly available open standards. A service-oriented architecture allows applications, running as services, to be accessed in a distributed computing environment, such as between multiple systems or across the Internet. A major focus of Web services is to make functional building blocks accessible over standard Internet protocols that are independent from platforms and programming languages. An open SOA platform would allow anyone to access and interact with these building blocks. A 2008 Harvard Business School working paper, titled "Opening Platforms: How, When and Why?", differentiated

10458-528: The development and use of free software, which they defined as software that grants users the freedom to run, study, share, and modify the code. This concept is similar to open source but places a greater emphasis on the ethical and political aspects of software freedom. Netscape released its source code under the Netscape Public License and later under the Mozilla Public License . Raymond

10584-538: The exchange of money among all the manufacturers. By the time the US entered World War II , 92 Ford patents and 515 patents from other companies were being shared among these manufacturers, without any exchange of money (or lawsuits). Early instances of the free sharing of source code include IBM 's source releases of its operating systems and other programs in the 1950s and 1960s, and the SHARE user group that formed to facilitate

10710-430: The exchange of software. Beginning in the 1960s, ARPANET researchers used an open " Request for Comments " (RFC) process to encourage feedback in early telecommunication network protocols. This led to the birth of the early Internet in 1969. The sharing of source code on the Internet began when the Internet was relatively primitive, with software distributed via UUCP , Usenet , IRC , and Gopher . BSD , for example,

10836-414: The extremes of market structures there is some similarity. The cost functions are the same. Both monopolies and perfectly competitive (PC) companies minimize cost and maximize profit. The shutdown decisions are the same. Both are assumed to have perfectly competitive factors markets. There are distinctions; some of the most important are as follows: The most significant distinction between a PC company and

10962-407: The first unit for $ 17 the second unit for $ 14 and so on which is listed in the table below. Total revenue would be $ 55, his total cost would be $ 25 and his profit would be $ 30. Several things are worth noting. The monopolist acquires all the consumer surplus and eliminates practically all the deadweight loss because he is willing to sell to anyone who is willing to pay at least the marginal cost. Thus

11088-400: The form of price control is necessary as it helped efficient market. To reduce prices and increase output, regulators often use average cost pricing. By average cost pricing, the price and quantity are determined by the intersection of the average cost curve and the demand curve. This pricing scheme eliminates any positive economic profits since price equals average cost. Average-cost pricing

11214-446: The general society of the costs of policing copyright infringement. Others argue that since consumers do not pay for their copies, creators are unable to recoup the initial cost of production and thus have little economic incentive to create in the first place. By this argument, consumers would lose out because some of the goods they would otherwise purchase would not be available. In practice, content producers can choose whether to adopt

11340-429: The generally poorer Ethiopian economics students. Similarly, most patented medications cost more in the U.S. than in other countries with a (presumed) poorer customer base. Typically, a high general price is listed, and various market segments get varying discounts. This is an example of framing to make the process of charging some people higher prices more socially acceptable. Perfect price discrimination would allow

11466-443: The growth of the concept of open source. Advocates in one field often support the expansion of open source in other fields. But Eric Raymond and other founders of the open-source movement have sometimes publicly argued against speculation about applications outside software, saying that strong arguments for software openness should not be weakened by overreaching into areas where the story may be less compelling. The broader impact of

11592-429: The individual programmers who start an open-source project may end up establishing companies offering products or services incorporating open-source programs. Examples of open-source software products are: The Google Summer of Code , often abbreviated to GSoC, is an international annual program in which Google awards stipends to contributors who successfully complete a free and open-source software coding project during

11718-689: The industry and force car manufacturers to adhere to their demands, or risk a lawsuit. In 1911, independent automaker Henry Ford won a challenge to the Selden patent . The result was that the Selden patent became virtually worthless and a new association (which would eventually become the Motor Vehicle Manufacturers Association ) was formed. The new association instituted a cross-licensing agreement among all US automotive manufacturers: although each company would develop technology and file patents, these patents were shared openly and without

11844-468: The inverse demand curve is of the form x = a − b y {\displaystyle x=a-by} . Then the total revenue curve is TR = a y − b y 2 {\displaystyle {\text{TR}}=ay-by^{2}} and the marginal revenue curve is thus MR = a − 2 b y {\displaystyle {\text{MR}}=a-2by} . From this several things are evident. First,

11970-466: The marginal cost (which is the output quantity for a perfectly competitive and allocatively efficient market). In 1848, J.S. Mill was the first individual to describe monopolies with the adjective "natural". He used it interchangeably with "practical". At the time, Mill gave the following examples of natural or practical monopolies: gas supply, water supply, roads, canals, and railways. In his Social Economics , Friedrich von Wieser demonstrated his view of

12096-587: The marginal revenue curve has the same x {\displaystyle x} -intercept as the inverse demand curve. Second, the slope of the marginal revenue curve is twice that of the inverse demand curve. What is not quite so evident is that the marginal revenue curve is below the inverse demand curve at all points ( y ≥ 0 {\displaystyle y\geq 0} ). Since all companies maximise profits by equating MR {\displaystyle {\text{MR}}} and MC {\displaystyle {\text{MC}}} it must be

12222-444: The market. Monopolies can be formed by mergers and integrations, form naturally , or be established by a government. In many jurisdictions, competition laws restrict monopolies due to government concerns over potential adverse effects. Holding a dominant position or a monopoly in a market is often not illegal in itself; however, certain categories of behavior can be considered abusive and therefore incur legal sanctions when business

12348-401: The monopolist and none to the consumer. In essence, every consumer would be indifferent between going completely without the product or service and being able to purchase it from the monopolist. As long as the price elasticity of demand for most customers is less than one in absolute value , it is advantageous for a company to increase its prices: it receives more money for fewer goods. With

12474-445: The monopolist to charge each customer the exact maximum amount they would be willing to pay. This would allow the monopolist to extract all the consumer surplus of the market. A domestic example would be the cost of airplane flights in relation to their takeoff time; the closer they are to flight, the higher the plane tickets will cost, discriminating against late planners and often business flyers. While such perfect price discrimination

12600-402: The one monopoly profit theorem is not true if customers in the monopoly good are stranded or poorly informed, or if the tied good has high fixed costs. A pure monopoly has the same economic rationality of perfectly competitive companies, i.e. to optimise a profit function given some constraints. By the assumptions of increasing marginal costs, exogenous inputs' prices, and control concentrated on

12726-468: The open-source movement, and the extent of its role in the development of new information sharing procedures, remain to be seen. The open-source movement has inspired increased transparency and liberty in biotechnology research, for example CAMBIA Even the research methodologies themselves can benefit from the application of open-source principles. It has also given rise to the rapidly-expanding open-source hardware movement. Open-source software

12852-508: The postal service as a natural monopoly: "In the face of [such] single-unit administration, the principle of competition becomes utterly abortive. The parallel network of another postal organization, beside the one already functioning, would be economically absurd; enormous amounts of money for plant and management would have to be expended for no purpose whatever." Overall, most monopolies are man-made monopolies, or unnatural monopolies, not natural ones. A government-granted monopoly (also called

12978-426: The power to set prices or quantities although not both. A monopoly is a price maker. The monopoly is the market and prices are set by the monopolist based on their circumstances and not the interaction of demand and supply. The two primary factors determining monopoly market power are the company's demand curve and its cost structure. Market power is the ability to affect the terms and conditions of exchange so that

13104-455: The price discrimination promotes efficiency. Secondly, by the pricing scheme price = average revenue and equals marginal revenue. That is the monopolist behaving like a perfectly competitive company. Thirdly, the discriminating monopolist produces a larger quantity than the monopolist operating by a uniform pricing scheme. Successful price discrimination requires that companies separate consumers according to their willingness to buy. Determining

13230-403: The price of a product is set by a single company (price is not imposed by the market as in perfect competition). Although a monopoly's market power is great it is still limited by the demand side of the market. A monopoly has a negatively sloped demand curve, not a perfectly inelastic curve. Consequently, any price increase will result in the loss of some customers. Price discrimination allows

13356-464: The price-fixing methods across market structures, analyze the effect of a certain structure on welfare, and vary technological or demand assumptions in order to assess the consequences for an abstract model of society. Most economic textbooks follow the practice of carefully explaining the "perfect competition" model, mainly because this helps to understand departures from it (the so-called "imperfect competition" models). The boundaries of what constitutes

13482-453: The product or service less than its price, monopoly pricing creates a deadweight loss referring to potential gains that went neither to the monopolist nor to consumers. Deadweight loss is the cost to society because it is inefficient. Given the presence of this deadweight loss, the combined surplus (or wealth) for the monopolist and consumers is necessarily less than the total surplus obtained by consumers by perfect competition. Where efficiency

13608-713: The product, not the price, expense, cost, or charge. For example, "being free to speak" is not the same as "free beer". Conversely, Richard Stallman argues the "obvious meaning" of term "open source" is that the source code is public/accessible for inspection, without necessarily any other rights granted, although the proponents of the term say the conditions in the Open Source Definition must be fulfilled. "Free and open" should not be confused with public ownership ( state ownership ), deprivatization ( nationalization ), anti-privatization ( anti-corporate activism ), or transparent behavior . Generally, open source refers to

13734-403: The product, then the market structure is that of a "pure monopoly". Sometimes, there are many sellers in an industry or there exist many close substitutes for the goods being produced, but nevertheless, companies retain some market power. This is termed "monopolistic competition", whereas in an oligopoly , the companies interact strategically. In general, the main results from this theory compare

13860-415: The production. The 2006 movie Elephants Dream is said to be the "world's first open movie", created entirely using open-source technology. Monopoly A monopoly (from Greek μόνος , mónos , 'single, alone' and πωλεῖν , pōleîn , 'to sell') is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by

13986-465: The proprietary license model. Examples include: The open-source model is a decentralized software development model that encourages open collaboration , meaning "any system of innovation or production that relies on goal-oriented yet loosely coordinated participants who interact to create a product (or service) of economic value, which they make available to contributors and noncontributors alike." A main principle of open-source software development

14112-482: The protective actions of copyright owners create what some call a " chilling effect " among cultural practitioners. The idea of an "open-source" culture runs parallel to " Free Culture ", but is substantively different. Free culture is a term derived from the free software movement , and in contrast to that vision of culture, proponents of open-source culture (OSC) maintain that some intellectual property law needs to exist to protect cultural producers. Yet they propose

14238-510: The public sphere. Messageboards are another platform for open-source culture. Messageboards (also known as discussion boards or forums), are places online where people with similar interests can congregate and post messages for the community to read and respond to. Messageboards sometimes have moderators who enforce community standards of etiquette such as banning spammers . Other common board features are private messages (where users can send messages to one another) as well as chat (a way to have

14364-490: The revenue maximizing quantity for the monopoly is 12.5 units and the revenue-maximizing price is 25. A company with a monopoly does not experience price pressure from competitors, although it may experience pricing pressure from potential competition. If a company increases prices too much, then others may enter the market if they are able to provide the same good, or a substitute, at a lesser price. The idea that monopolies in markets with easy entry need not be regulated against

14490-412: The risk of losing their monopoly to new entrants. This is likely to happen when a market's barriers to entry are low. It might also be because of the availability in the longer term of substitutes in other markets. For example, a canal monopoly, while worth a great deal during the late 18th century United Kingdom, was worth much less during the late 19th century because of the introduction of railways as

14616-445: The same time continue their business. ...Monopoly, besides, is a great enemy to good management. – Adam Smith (1776), The Wealth of Nations According to the standard model, in which a monopolist sets a single price for all consumers, the monopolist will sell a lesser quantity of goods at a higher price than would companies by perfect competition . Because the monopolist ultimately forgoes transactions with consumers who value

14742-406: The seller divides the consumers into different groups according to their willingness to pay as measured by their price elasticity of demand. Each group of consumers effectively becomes a separate market with its own demand curve and marginal revenue curve. The firm then attempts to maximize profits in each segment by equating MR and MC, Generally the company charges a higher price to the group with

14868-683: The standard journalistic techniques of news gathering and fact checking, reflecting open-source intelligence , a similar term used in military intelligence circles. Now, open-source journalism commonly refers to forms of innovative publishing of online journalism , rather than the sourcing of news stories by a professional journalist. In the 25 December 2006 issue of TIME magazine this is referred to as user created content and listed alongside more traditional open-source projects such as OpenSolaris and Linux . Weblogs , or blogs, are another significant platform for open-source culture. Blogs consist of periodic, reverse chronologically ordered posts, using

14994-638: The student may have been able to purchase at the Ethiopian price. Similarly, a wealthy student in Ethiopia may be able to or willing to buy at the U.S. price, though naturally would hide such a fact from the monopolist so as to pay the reduced third world price. These are deadweight losses and decrease a monopolist's profits. Deadweight loss is considered detrimental to society and market participation. As such, monopolists have substantial economic interest in improving their market information and market segmenting . There

15120-720: The summer. GSoC is a large scale project with 202 participating organizations in 2021. There are similar smaller scale projects such as the Talawa Project run by the Palisadoes Foundation (a non profit based in California, originally to promote the use of information technology in Jamaica, but now also supporting underprivileged communities in the US) Open-source hardware is hardware which initial specification, usually in

15246-442: The team. The three basic forms of price discrimination are first, second and third degree price discrimination. In first degree price discrimination the company charges the maximum price each customer is willing to pay. The maximum price a consumer is willing to pay for a unit of the good is the reservation price. Thus for each unit the seller tries to set the price equal to the consumer's reservation price. Direct information about

15372-540: The term of copyright (particularly in the United States) and penalties, such as those articulated in the Digital Millennium Copyright Act (DMCA), placed on attempts to circumvent anti-piracy technologies. Although artistic appropriation is often permitted under fair-use doctrines, the complexity and ambiguity of these doctrines creates an atmosphere of uncertainty among cultural practitioners. Also,

15498-1094: The term to refer to other forms of open collaboration, such as in Internet forums , mailing lists and online communities . Open collaboration is also thought to be the operating principle underlining a gamut of diverse ventures, including TEDx and Misplaced Pages. Open collaboration is the principle underlying peer production , mass collaboration , and wikinomics . It was observed initially in open-source software, but can also be found in many other instances, such as in Internet forums , mailing lists , Internet communities, and many instances of open content , such as Creative Commons . It also explains some instances of crowdsourcing , collaborative consumption , and open innovation . Riehle et al. define open collaboration as collaboration based on three principles of egalitarianism , meritocracy , and self-organization . Levine and Prietula define open collaboration as "any system of innovation or production that relies on goal-oriented yet loosely coordinated participants who interact to create

15624-525: Was especially active in the effort to popularize the new term. He made the first public call to the free software community to adopt it in February 1998. Shortly after, he founded The Open Source Initiative in collaboration with Bruce Perens . The term gained further visibility through an event organized in April 1998 by technology publisher Tim O'Reilly . Originally titled the "Freeware Summit" and later known as

15750-450: Was first widely distributed by posts to comp.os.linux on the Usenet, which is also where its development was discussed. Linux followed in this model. Open source as a term emerged in the late 1990s by a group of people in the free software movement who were critical of the political agenda and moral philosophy implied in the term "free software" and sought to reframe the discourse to reflect

15876-579: Was used in the 1914 book Social Economics written by Friedrich von Wieser. As mentioned, government regulations are frequently used with natural monopolies to help control prices. An example that can illustrate this can be found when looking at the United States Postal Service, which has a monopoly over types of mail. According to Wieser, the idea of a competitive market within the postal industry would lead to extreme prices and unnecessary spending, and this highlighted why government regulation in

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