Dynamic mixed duopoly: A model motivated by Linux vs. Windows
AbstractThis paper analyzes a dynamic mixed duopoly in which a profit-maximizing competitor interacts with a competitor that prices at zero (or marginal cost), with the cumulation of output affecting their relative positions over time. The modeling effort is motivated by interactions between Linux, an open-source operating system, and Microsoft's Windows in the computer server segment, and consequently emphasizes demand-side learning effects that generate dynamic scale economies (or network externalities). Analytical characterizations of the equilibrium under such conditions are offered, and some comparative static and welfare effects are examined.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/519.
Length: 40 pages
Date of creation: 23 Sep 2003
Date of revision:
open-source software; network effects; microsoft; linux; competitive dynamics; strategy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-11-16 (All new papers)
- NEP-IND-2003-11-23 (Industrial Organization)
- NEP-NET-2003-12-07 (Network Economics)
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