Open Source vs Closed Source Software: Public Policies in the Software Market
AbstractThis 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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Bibliographic InfoPaper provided by EconWPA in its series Industrial Organization with number 0306001.
Length: 33 pages
Date of creation: 16 Jun 2003
Date of revision:
Note: Type of Document - pdf; prepared on Latex; to print on PostScript; pages: 33; figures: included
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software market; open source software; mandatory adoption; information campaign; subsidisation; network externalities;
Find related papers by JEL classification:
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-25 (All new papers)
- NEP-INO-2003-06-25 (Innovation)
- NEP-NET-2003-09-08 (Network Economics)
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.:
- 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.
- Erik Brynjolfsson & Chris F. Kemerer, 1993.
"Network Externalities in Microcomputer Software: An Econometric Analysis of the Spreadsheet Market,"
Working Paper Series
158, MIT Center for Coordination Science.
- 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.
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