Coase’s Penguin, or,  
Linux and The Nature of the Firm 
Yochai Benkler† 



characteristics that make large-scale collaborations in many information production fields sustainable and productive in the digitally networked environment without reliance either on markets or managerial hierarchy.
374




Commons-based peer production, the emerging third model of 
production I describe here, relies on decentralized information gathering 
and exchange to reduce the uncertainty of participants. It has particular 
advantages as an information process for identifying and allocating human 
creativity available to work on information and cultural resources. It 
depends on very large aggregations of individuals independently scouring 
their information environment in search of opportunities to be creative in 
small or large increments. These individuals then self-identify for tasks and 
perform them for a variety of motivational reasons that I discuss at some length.  
375-375



other model different to market and firm models of organization

organized on either a market-based or a 
managerial/hierarchical model





Peer production has an advantage over firms and markets because it 
allows larger groups of individuals to scour larger groups of resources in 
search of materials, projects, collaborations, and combinations than is possible for firms or individuals who function in markets. Transaction costs 
associated with property and contract limit the access of people to each 
other, to resources, and to projects when production is organized on a 
market or firm model, but not when it is organized on a peer production 
model.

376-377




academic enterprise, and in particular scientific research. Thousands of 
individuals make contributions to a body of knowledge, set up internal 
systems of quality control, and produce the core of our information and 
knowledge environment. 
381
knowledge commons





The advantages of peer production are, then, improved identification 
and allocation of human creativity.
377




ubiquitous computer communications networks are 
bringing about a dramatic change in the scope, scale, and efficacy of peer 
production. As computers and network connections become faster, cheaper, 
and more ubiquitous, we are seeing the phenomenon of nonprofessional 
peer production of information scale to much larger sizes and perform more 
complex tasks than were possible in the past for nonprofessional 
production. 
383



volunteer effort




Wikipedia provides a rich example of a 
medium-sized collection of individuals who successfully collaborate to 
create an information product of mid- to highbrow quality. In particular, it 
suggests that even in a group of this size, social norms coupled with a 
simple facility to allow any participant to edit out blatant opinion written by 
another in contravention of the social norms keep the group on track. 
387



Peer production is emerging as an important mode of information 
production because of four attributes of the pervasively networked 
information economy.
404



peer production may be less costly than 
property/market-based production or organizational production
403



examples of peer prod:







the Wikipedia project.33 The project 
involves roughly 2000 volunteers who are collaborating to write an 
encyclopedia. The project runs on a free software collaborative authorship 
tool, Wiki, which is a markup language similar in concept to HTML, but is 
relatively easier to implement, allows multiple people to edit a single 
document and interlock multiple documents, and generates archives of the 
changes made to each. 





Project Gutenberg
Distributed Proofreaders. 
Project Gutenberg59 is a collaboration of hundreds of volunteers who scan 
in and correct books so that they are freely available in digital form. 



Slashdot
Perhaps the most elaborate multilayer mechanism for peer production 
of relevance and accreditation is Slashdot.50 Billed as “News for Nerds,” 
Slashdot primarily consists of users commenting on initial submissions that 
cover a variety of technology-related topics.