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When Does a Firm Support Substitute Open Source Programming?

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Author Info
Mikko Mustonen
Abstract

Software firms are observed to support programmers' communities, which develop rival open source programs. A firm selling a copyright program has an incentive to support substitute copyleft programming when support creates compatibility between the programs and programs exhibit network effects. Costly compatibility benefits the firm as its consumers gain access to the community's services but may also hurt the firm because it cannot profit from the valuation difference between incompatible networks. The incentive arises under a weak network effect even when the consumers' benefit is small. Standardization and enlarging the open source programmers' community do not always increase welfare. Copyright Blackwell Publishing 2005.

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Article provided by Blackwell Publishing in its journal Journal of Economics & Management Strategy.

Volume (Year): 14 (2005)
Issue (Month): 1 (03)
Pages: 121-139
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Handle: RePEc:bla:jemstr:v:14:y:2005:i:1:p:121-139

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  1. Nicholas Economides & Evangelos Katsamakas, 2005. "Linux vs. Windows: A comparison of application and platform innovation incentives for open source and proprietary software platforms," Working Papers 05-07, NET Institute, revised Oct 2005. [Downloadable!]
    Other versions:
  2. Alex Gaudeul, 2005. "Public provision of a private good: What is the point of the BSD license?," Industrial Organization 0511002, EconWPA. [Downloadable!]
  3. Alexia Gaudeul, 2008. "Consumer Welfare and Market Structure in a Model of Competition Between Open Source and Proprietary Software," Working Papers 08-31, Centre for Competition Policy, University of East Anglia. [Downloadable!]
  4. Nicholas Economides & Evangelos Katsamakas, 2005. "Two-sided competition of proprietary vs. open source technology platforms and the implications for the software industry1," Working Papers 05-06, NET Institute, revised Oct 2005. [Downloadable!]
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  5. Evangelos Katsamakas & Mingdi Xin, 2005. "An economic analysis of enterprise adoption of open source software," Working Papers 05-29, NET Institute, revised Oct 2005. [Downloadable!]
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