Open Source Software, Competition and Potential Entry
AbstractWe analyze a model with two software firms, quality improving coding expenditures and potential competition. The firms can publish parts of their software as open source. Publishing software implies positive spillovers and thus reduces the firms' coding costs. On the other hand there exist two negative effects. First, lower coding costs induce higher coding expenditures which decreases the firms' profits if their programs are substitutes. Second, open source encourages entry and increases the expenditures required to deter entry. The firms' optimal open source decisions balance these opposite effects.
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Bibliographic InfoPaper provided by Berlecon Research in its series Berlecon Research Papers with number 0005.
Date of creation: May 2003
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Open Source; Spillovers; Potential Entry;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-08-31 (All new papers)
- NEP-INO-2003-08-31 (Innovation)
- NEP-MIC-2003-08-31 (Microeconomics)
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