UC Irvine

The first chapter models the general mechanisms/tradeoffs underpinning the dynamics of collaborative production using a club theoretic framework and drawing on tools from differential game theory. Individuals with preferences that are far from the objective of the club may not immediately split and form a new club. Instead they may take advantage of the increasing returns from club membership and incubate their new club within an existing one. In equilibrium, clubs may not be able to prevent this type of behavior even if it is undesired. Moreover, there are a range of conditions under which clubs may encourage incubation of future competitors to take advantage of increasing returns themselves and build up their own capital base.

The second chapter abstracts away from the dynamics and focuses on the static trade-offs. Existing public and club good models assume monotonicity in the utility of both consumption and provision. A wide range of public and club goods violate these assumptions. Accounting for appropriate non-monotonicities dramatically alters the equilibrium structure and welfare. When the utility from consumption is no longer monotonic, increasing the number of contributors mitigates the free-rider problem, rather than exacerbating it. When both the consumption value and provision cost are non-monotonic, increasing the number of contributors not only mitigates the free-rider problem, but leads to an over-provision problem in which both the number of contributors and the intensity of contributions are inefficiently high. When the population is large, every equilibrium yields over-provision. Lastly welfare-maximizing policies involve transferring surpluses from consumers to producers.

The third chapter illustrates the competitive aspects of collaborative production in the context of the software industry. I address whether both proprietary and open source software will survive and how producers of proprietary software differentiate themselves from open source competition. I analyze competition between a firm producing proprietary software and a community producing open source software. If the firm faces no competition, then the software caters to less technologically savvy individuals. When facing competition, the open source software caters to the most technologically savvy individuals, leading the firm to target even less savvy individuals than it would when acting as a monopolist.