While the economic impact of, and the interest in, open source innovation and production has increased dramatically in recent years, there is still no widely accepted theory explaining its performance. We combine original fieldwork with agent-based simulation to propose that the performance of open source is surprisingly robust, even as it happens in seemingly harsh environments with free rider, rival goods, and high demand. Open source can perform well even when cooperators constitute a minority, although their presence reduces variance. Under empirically realistic assumptions about the level of cooperative behavior, open source can survive even increased rivalry and performance can thrive if demand is managed. The plausibility of the propositions is demonstrated through qualitative data and simulation results.