The article presents an economic analysis of Libre software and of its sustainability as a new economic model for software. We underline the role of Libre software development communities and analyze incentives for both kernel and obscure developers. We emphasize the role of the so-called ‘public’ licenses to provide an appropriate institutional framework. We show that several features of Libre software also allow it to improve faster than proprietary software, and therefore to achieve strong market performance when competing against existing standards, even when proprietary software producers react. We illustrate our point using a simple local and global interaction model to study the technological competition between Linux and Windows on the server operating system (OS) market. We finally argue that if sufficient initial momentum could be created through public intervention Libre software could turn from a fad into an efficient economic institution to correct inefficiencies due to network externalities.