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Date: -- (:)
From: Markus Mottl <mottl@m...>
Subject: Re: R: Consortium Caml
On Fri, 09 Feb 2001, Fabien Fleutot wrote:
> That's false: in a consortium, one pays a fee for one year, and by
> the end of that year, there's no more membership, so no more value,
> and no investment. A stock exchange wouldn't work in the same way,
> if one had to re-buy its own stocks every year, would it ?

This is a legal question rather than an economic one. Still, I fear that
it will be difficult to gain many (= enough) members unless they see a
certain benefit from it without having too much risk. The problem with the
consortium is that if you are discontent, you will lose all of the donated
money *and* your rights (after at most one year). If you have some ability
to trade your "share of rights", you can get out again more easily.

I think it is a realist assumption that in the longer term nobody will
"donate" unless they have a profit from it. Considering an amount of 2kE
(per year!), even my enthusiasm for OCaml is overstretched (that's far
more than my monthly income).

Assuming that OCaml makes it successfully into mainstream technology
due to increased funding, having a large share of the votes is equal
to having more market power (you can influence mainstream technology to
your advantage): people (companies) will have interest in buying votes.

But with a consortium with membership fees there are naughty
game-theoretic aspects: if you don't donate and OCaml fails, you won't
care: you haven't lost anything. If OCaml succeeds - fine! Then you
can still participate at a later point and you'd have had a "free ride"
until then (and more purchasing power = more votes at a more significant
later date). Therefore, a "rational" potential sponsor wouldn't donate:
he can only benefit with this strategy. But if all do so, OCaml is very
likely to fail due to lack of funding!

Therefore, it is necessary to change the pay-off matrix in such a way
that it is rational to donate for OCaml - or better: to invest. I don't
see how the consortium guarantees this: why should I donate for OCaml so
that financially much more powerful but technologically short-sighted
(or more rational?) companies will benefit from it in the future by
buying me out? - I'd have had the costs and they'd take the profit (and
then they'd probably take technological decisions like "we want to have
a VisualOCaml" - argh!).

> The idea of setting up facilities to create associations able to gather
> the required 2K euro or wathever amount looks better and simpler: as soom
> as the first one will be released, anybody else would just have to
> cut-and-paste its status to create a new one. 

But even "associations" won't have a rational basis for donating.

> Another solution would be to fix a minimal annual amount, and to give
> a representativeness proportionnal to one's contribution: that way, it
> wouldn't be necessary to create more than one association. Moreover,
> this association would just be a way to externalise administrative
> tasks, from the INRIA's point of view.

I'd still favour a way in which the number of voting rights ("shares") can
be traded: this would give investors control for an indefinite amount of
time rather than just for a year and thus prevent others from free-riding.

Issuing more voting rights would allow the OCaml-project to raise more
money: the stakeholders will only allow this if it's in their interest =
if the additional funding will lead to more profitable technology and
therefore offset the diluting effect of more shares (an incentive for the
OCaml-project to work efficiently in the interest of the stakeholders).

The important bit is that during the "IPO" the voting rights are split
between as many independent invididuals as possible, preferably ones
with adequate technological background (members of this list? ;)

There may be prohibiting legal aspects beyond my understanding, because
I don't know anything about the relevant French laws...

Best regards,
Markus Mottl

-- 
Markus Mottl, mottl@miss.wu-wien.ac.at, http://miss.wu-wien.ac.at/~mottl