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Open Source Development in a Differentiated Duopoly

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Author Info
Stephane Verani () (Department of Economics, The University of Western Australia)
Abstract

Open source software is released under an open source license giving individuals the right to use, modify, and redistribute freely the programs. This paper proposes a model of differentiated duopoly in which firms invest in the development of proprietary or open source software. The main findings are: (i) firms invest more when the products are substitutes; (ii) for substitute products, firms’ investment in software development is greatest when the software is open source; (iii) for close to perfect complements, firms’ investment in software development is greatest when the software is proprietary; and (iv) for substitute products, investment in open source software yields higher profits than investment in proprietary software.

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File URL: http://www.biz.uwa.edu.au/home/research/discussionworking_papers/economics?f=147008
File Format: application/pdf
File Function: First version, 2006
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Publisher Info
Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 06-05.

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Length: 28 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:uwa:wpaper:06-05

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References listed on IDEAS
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  1. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter. [Downloadable!] (restricted)
  2. Josh Lerner & Jean Tirole, 2003. "The Scope of Open Source Licensing," Levine's Bibliography 506439000000000140, UCLA Department of Economics. [Downloadable!]
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  3. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring. [Downloadable!] (restricted)
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  4. Hackner, Jonas, 2000. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Journal of Economic Theory, Elsevier, vol. 93(2), pages 233-239, August. [Downloadable!] (restricted)
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  5. Hertel, Guido & Niedner, Sven & Herrmann, Stefanie, 2003. "Motivation of software developers in Open Source projects: an Internet-based survey of contributors to the Linux kernel," Research Policy, Elsevier, vol. 32(7), pages 1159-1177, July. [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. Amir, Rabah & Wooders, John, 2000. "One-Way Spillovers, Endogenous Innovator/Imitator Roles, and Research Joint Ventures," Games and Economic Behavior, Elsevier, vol. 31(1), pages 1-25, April. [Downloadable!] (restricted)
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  8. Michael Katz & Richard Gilbert, 2001. "An Economist's Guide to U.S. v Microsoft," Competition Policy Center, Working Paper Series CPC01-019, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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  9. 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)
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  10. Alexandre Gaudeul, 2004. "Competition between open-source and proprietary software: the (La)TeX case study," Industrial Organization 0409007, EconWPA. [Downloadable!]
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