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Dynamic mixed duopoly: A model motivated by Linux vs. Windows

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Author Info
Casadesus-Masanell, Ramon () (IESE Business School)
Ghemawat, Pankaj () (Harvard Business School)
Abstract

This 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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Publisher Info
Paper provided by IESE Business School in its series IESE Research Papers with number D/519.

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Length: 40 pages
Date of creation: 23 Sep 2003
Date of revision:
Handle: RePEc:ebg:iesewp:d-0519

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Postal: IESE Business School, Av Pearson 21, 08034 Barcelona, SPAIN
Web page: http://www.iese.edu/
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Related research
Keywords: open-source software; network effects; microsoft; linux; competitive dynamics; strategy;

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References listed on IDEAS
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  1. Dalle, Jean-Michel & Jullien, Nicolas, 2003. "'Libre' software: turning fads into institutions?," Research Policy, Elsevier, vol. 32(1), pages 1-11, January. [Downloadable!] (restricted)
  2. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring. [Downloadable!] (restricted)
    Other versions:
  3. 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)
  4. Ross, David R, 1986. "Learning to Dominate," Journal of Industrial Economics, Blackwell Publishing, vol. 34(4), pages 337-53, June. [Downloadable!] (restricted)
  5. 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)
  6. Justin Pappas Johnson, 2002. "Open Source Software: Private Provision of a Public Good," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(4), pages 637-662, December. [Downloadable!] (restricted)
  7. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May. [Downloadable!] (restricted)
  8. Joseph Farrell & Garth Saloner, 1985. "Installed Base and Compatibility With Implications for Product Preannouncements," Working papers 385, Massachusetts Institute of Technology (MIT), Department of Economics.
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  9. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring. [Downloadable!] (restricted)
  10. Bruce Kogut & Anca Metiu, 2001. "Open-Source Software Development and Distributed Innovation," Oxford Review of Economic Policy, Oxford University Press, vol. 17(2), pages 248-264, Summer.
  11. Jürgen Bitzer & Philipp J. H. Schröder, 2002. "Bug-Fixing and Code-Writing: The Private Provision of Open Source Software," Discussion Papers of DIW Berlin 296, DIW Berlin, German Institute for Economic Research. [Downloadable!]
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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. Josh Lerner & Jean Tirole, 2004. "The Economics of Technology Sharing: Open Source and Beyond," NBER Working Papers 10956, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Evangelos Katsamakas & Mingdi Xin, 2005. "An economic analysis of enterprise adoption of open source software," Working Papers 05-29, NET Institute, revised Oct 2005. [Downloadable!]
  3. Fabrizio Cesaroni & Paola Giuri, 2005. "Intellectual Property Rights and Market Dynamics," LEM Papers Series 2005/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  4. Alexandre Gaudeul, 2004. "Competition between open-source and proprietary software: the (La)TeX case study," Industrial Organization 0409007, EconWPA. [Downloadable!]
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