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Technology, property rights and organizational diversity in the software industry

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  • Landini, Fabio

Abstract

Why do open- and closed-source productions co-exist? To address this question, the paper studies the viability of distinct systems for software development. The model shows that: (a) for low design costs of modularity, both open- and closed-source productions are viable systems; (b) closed-source production is more likely to be adopted the greater the expected rents on software; and (c) production efficiency is not a necessary condition for the stochastic stability of a system to obtain. These three results can shed light on the emergence of organizational diversity in the software industry. The paper adds to the literature in three ways: first, it considers property rights and technology as endogenous variables in the process of system design; second it argues that in producing software multiple equilibrium designs may exist; and third, it shows that, in because of high rents and low design costs of modularity, production inefficiency can be persistent.

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Bibliographic Info

Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

Volume (Year): 23 (2012)
Issue (Month): 2 ()
Pages: 137-150

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Handle: RePEc:eee:streco:v:23:y:2012:i:2:p:137-150

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Web page: http://www.elsevier.com/locate/inca/525148

Related research

Keywords: Software production; System design; Institutional diversity; Transaction costs; Evolutionary games;

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References

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Citations

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Cited by:
  1. Fabio Landini, 2012. "The Evolution of Control in the Digital Economy," Department of Economics University of Siena, Department of Economics, University of Siena 655, Department of Economics, University of Siena.
  2. Fabio Landini, 2012. "Institutional Change and Information Production," Department of Economics University of Siena, Department of Economics, University of Siena 645, Department of Economics, University of Siena.
  3. Erkan Gurpinar, 2013. "Institutional Complementarities and Property Rights-Technology Equilibria under Knowledge Intensive Technology," Department of Economics University of Siena, Department of Economics, University of Siena 673, Department of Economics, University of Siena.
  4. Erkan Gürpinar, 2013. "Organizational Forms in the Knowledge Economy: A Comparative Institutional Analysis," Department of Economics University of Siena, Department of Economics, University of Siena 679, Department of Economics, University of Siena.

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