Edward Bilodeau links to Andrea Ciffolilli in First Monday on Wikipedia.#

The economics behind the power of Wikipedia and it's power against vandalism.

Any transaction involves costs (Coase, 1937; Williamson, 1985). These range from the costs of writing a contract, to the costs of negotiating how to deal with unexpected contingences, from the costs of coordination to the costs of motivation (or commitment). Such costs are determined either by human characteristics (bounded rationality and opportunism), or by the type of transaction (frequency, uncertainty, asset specificity).

Teece (1988) claims that high transaction costs represent one of the main limits to the division of labour in the production and use of knowledge.

Wiki technology in a way literally cancels transaction costs for editing and changing information. Hence, this reduction in transaction costs acts as a catalyst for the development of the community. In turn, these reduced transaction costs means that there is full exploitation of massive collaboration economies. Hence, in the case of horizontal information assemblages, we might argue that any incentive that allows more authors to freely join in a given task, the larger the assemblage of information that is eventually produced (or in the case of Wikipedia, a larger number of articles is possible).

Another secret of the success of Wikipedia is related to the incentives that contribute to a "creative construction" of information, rather than a "creative destruction" of it. As noted earlier, I expected Wikipedia to be engaged in an endless war among reliable contributions and graffiti attacks that would have blocked the development of the Web site. In reality, that has not happened, basically because all changes made to any article are stored; it is possible to undo any unapproved modification with a single click. This makes the activity of littering a page extremely more expensive for an individual (in terms of time and reputation), than it is for anyone else. Therefore, also in this circumstance, it is a matter of costs.

On authority,

Final policy decisions are up to one of the founders, Jimmy Wales [13]. However, if this sort of benevolent dictator attempted to deviate from a neutral and objective policy towards content (for example, in order to push a specific political agenda), then the license [14] provides a strong counter—balance to his power. The contributors may and should, in such a case, take the database and the software and set up a competing project [15].

The reputation system of Wikipedia and how it could be more effective,

The reputation of Wikipedians grows with the number of their contributions. By visiting the previous version pages of each article, it is possible to go back to its author or authors. However, the names or the nicknames of the authors, unlike print encyclopaedias, do not appear at the bottom of the articles. In my view, this is a pity because the possibility to directly show the names of the authors would represent a powerful incentive and a strong gratification for contributors. The current anonymity may represent, in the long run, a threat to retention of members. It is true that many users edit articles, but this does not preclude the possibility to show the name of the majority contributor (for instance the person or the persons that wrote more than 50 percent of a document). Such a possibility may also stimulate competition among users and this can only be healthy when the effort is directed to the construction of a collection of information.