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Dual licensing in open source software markets

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  • Comino, Stefano
  • Manenti, Fabio M.

Abstract

In this paper we present a theoretical model to study the characteristics and the commercial sustainability of dual licensing, an open source (OS) business strategy that has gained popularity among software vendors. With dual licensing, a firm releases the same software product under both a traditional proprietary license and an open source one. We show that the decision to employ a dual licensing strategy occurs whenever the feedbacks of the open source community are valuable enough compared to the quality of the software that the firm is able to develop in-house. Our analysis points to the central role of an appropriate managing of OS licenses in order to balance the pros and cons of “going open source” and to make this versioning strategy viable for software vendors; our analysis also suggests a possible explanation for the observed proliferation of open source licenses.

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File URL: http://www.sciencedirect.com/science/article/pii/S016762451100028X
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Bibliographic Info

Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 23 (2011)
Issue (Month): 3 ()
Pages: 234-242

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Handle: RePEc:eee:iepoli:v:23:y:2011:i:3:p:234-242

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Web page: http://www.elsevier.com/locate/inca/505549

Related research

Keywords: Open source software; Open source business models; Embedded software; Dual licensing; Versioning;

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References

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  1. Josh Lerner & Jean Tirole, 2003. "The Scope of Open Source Licensing," Levine's Working Paper Archive 506439000000000140, David K. Levine.
  2. Comino, Stefano & Manenti, Fabio M. & Parisi, Maria Laura, 2007. "From planning to mature: On the success of open source projects," Research Policy, Elsevier, vol. 36(10), pages 1575-1586, December.
  3. Chaim Fershtman & Neil Gandal, 2007. "Open source software: Motivation and restrictive licensing," International Economics and Economic Policy, Springer, vol. 4(2), pages 209-225, August.
  4. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
  5. Mikko Mustonen, 2005. "When Does a Firm Support Substitute Open Source Programming?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 121-139, 03.
  6. Koski, Heli, 2007. "Private-collective Software Business Models: Cordinatitons and Commercialization via Licensing," Discussion Papers 1091, The Research Institute of the Finnish Economy.
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Citations

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Cited by:
  1. Andreas Freytag & Sebastian von Engelhardt, 2010. "Institutions, Culture, and Open Source," Jena Economic Research Papers 2010-010, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. Ginchev Ivan, 2008. "Optimality conditions for scalar and vector optimization problems with quasiconvex inequality constraints," Economics and Quantitative Methods qf0805, Department of Economics, University of Insubria.

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