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Private Provision of a Complementary Public Good

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  • Richard Schmidtke
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    Abstract

    For several years, an increasing number of ¯rms are investing in Open Source Software (OSS). While improvements in such a non- excludable public good cannot be appropriated, companies can bene¯t indirectly in a complementary proprietary segment. We study this incentive for investment in OSS. In particular we ask how (1) market entry and (2) public investments in the public good a®ects the ¯rms' production and pro¯ts. Surprisingly, we ¯nd that there exist cases where incumbents bene¯t from market entry. Moreover, we show the counter-intuitive result that public spending does not necessarily lead to a decreasing voluntary private contribution.

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    File URL: http://www.bgpe.de/texte/DP/004_schmidtke.pdf
    File Function: First version, 2006
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    Bibliographic Info

    Paper provided by Bavarian Graduate Program in Economics (BGPE) in its series Working Papers with number 004.

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    Length: 39 pages
    Date of creation: Jun 2006
    Date of revision:
    Handle: RePEc:bav:wpaper:004_schmidtke

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    Web page: http://www.bgpe.de/
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    Related research

    Keywords: Open Source Software; Private Provision of Public Goods; Cournot- Nash Equilibrium; Complements; Market Entry;

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    Cited by:
    1. Sebastian von Engelhardt, 2010. "Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models," Jena Economic Research Papers 2010-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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