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Open Source vs Closed Source Software: Public Policies in the Software Market

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Author Info

  • Stefano Comino

    (Dipartimento di Scienze Economiche "M. Fanno" Universita' di Padova ITALY)

  • Fabio M. Manenti

    (Dipartimento di Scienze Economiche "M. Fanno" Universita' di Padova ITALY)

Abstract

This paper analyses the impact of public policies supporting open source software (OSS). Users can be divided between those who know about the existence of OSS, the "informed" adopters, and the "uninformed" ones; the presence of uniformed users yields to market failures that justify government intervention. We study three policies: i) mandatory adoption, when government forces public agencies, schools and universities to adopt OSS, ii) information campaign, when the government informs the uninformed users about the existence and the characteristics of OSS and, iii) subsidisation, when consumers are payed a subsidy when adopting OSS. We show that the second policy enhances welfare, the third is always welfare decreasing while mandatory adoption can be either good or bad for society depending on the number of informed and uninformed adopters. We extend the model to the presence of network effects and we show that strong externalities require "drastic" policies.

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File URL: http://128.118.178.162/eps/io/papers/0306/0306001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0306001.

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Length: 33 pages
Date of creation: 16 Jun 2003
Date of revision:
Handle: RePEc:wpa:wuwpio:0306001

Note: Type of Document - pdf; prepared on Latex; to print on PostScript; pages: 33; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: software market; open source software; mandatory adoption; information campaign; subsidisation; network externalities;

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References

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  1. Erik Brynjolfsson & Chris F. Kemerer, 1996. "Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market," Management Science, INFORMS, vol. 42(12), pages 1627-1647, December.
  2. 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.
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Citations

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Cited by:
  1. Miralles, Francesc & Sieber, Sandra & Valor, Josep, 2005. "CIO herds and user gangs in the adoption of open source software," IESE Research Papers D/595, IESE Business School.
  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.
  3. Raasch, Christina & Lee, Viktor & Spaeth, Sebastian & Herstatt, Cornelius, 2013. "The rise and fall of interdisciplinary research: The case of open source innovation," Research Policy, Elsevier, vol. 42(5), pages 1138-1151.

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