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Open Source Software, Competition and Potential Entry

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Author Info
Thorsten Wichmann () (Berlecon Research)
Pio Baake (ifo Institute for Economic Research)

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Abstract

We 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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File URL: http://www.berlecon.de/tw/osscompetition.pdf
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Publisher Info
Paper provided by Berlecon Research in its series Berlecon Research Papers with number 0005.

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Date of creation: May 2003
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Handle: RePEc:ber:bertw1:0005

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Web page: http://www.berlecon.de

For technical questions regarding this item, or to correct its listing, contact: (Thorsten Wichmann).

Related research
Keywords: Open Source Spillovers Potential Entry

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Schmidt, Klaus M. & Schnitzer, Monika, 2003. "Public Subsidies for Open Source? Some Economic Policy Issues of the Software Market," CEPR Discussion Papers 3793, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Josh Lerner & Jean Tirole, 2002. "The Scope of Open Source Licensing," NBER Working Papers 9363, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Lerner, Josh & Tirole, Jean, 2002. "Some Simple Economics of Open," Journal of Industrial Economics, Blackwell Publishing, vol. 50(2), pages 197-234, June. [Downloadable!] (restricted)
  4. Saint-Paul, Gilles, 2003. "Information Sharing and Cumulative Innovation in Business Networks," CEPR Discussion Papers 4116, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 995-1012, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alexandre Gaudeul, 2004. "Competition between open-source and proprietary software: the (La)TeX case study," Industrial Organization 0409007, EconWPA. [Downloadable!]
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