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The Impact of Entry and Competition by Open Source Software on Innovation Activity

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Author Info

  • Jürgen Bitzer

    (Free University Berlin)

  • Philipp J.H. Schröder

    (Aarhus School of Business)

Abstract

This paper presents the stylized facts of open source software innovation and provides empirical evidence on the impact of increased competition by OSS on the innovative activity in the software industry. Furthermore, we introduce a simple formal model that captures the innovation impact of OSS entry by examining a change in market structure from monopoly to duopoly under the assumption that software producers compete in technology rather than price or quantities. The paper identifies a pro-innovative effect of OSS competition.

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File URL: http://128.118.178.162/eps/io/papers/0512/0512001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0512001.

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Length: 38 pages
Date of creation: 02 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpio:0512001

Note: Type of Document - pdf; pages: 38
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Web page: http://128.118.178.162

Related research

Keywords: open source software; innovation; strategic interaction;

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References

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  1. O'Mahoney, Siobhán & Ferraro, Fabrizio, 2004. "Managing the boundary of an 'open' project," IESE Research Papers D/537, IESE Business School.
  2. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
  3. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  4. 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.
  5. Bitzer, Jurgen, 2004. "Commercial versus open source software: the role of product heterogeneity in competition," Economic Systems, Elsevier, vol. 28(4), pages 369-381, December.
  6. Jürgen Bitzer & Wolfram Schrettl & Philipp J.H. Schröder, 2005. "Intrinsic Motivation in Open Source Software Development," Development and Comp Systems 0505007, EconWPA.
  7. Bresnahan, Timothy F & Greenstein, Shane, 1999. "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 1-40, March.
  8. Bitzer, Jurgen & Schroder, Philipp J.H., 2005. "Bug-fixing and code-writing: The private provision of open source software," Information Economics and Policy, Elsevier, vol. 17(3), pages 389-406, July.
  9. Lerner, Josh & Tirole, Jean, 2002. "Some Simple Economics of Open," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 197-234, June.
  10. Franke, Nikolaus & Shah, Sonali, 2003. "How communities support innovative activities: an exploration of assistance and sharing among end-users," Research Policy, Elsevier, vol. 32(1), pages 157-178, January.
  11. Mustonen, Mikko, 2003. "Copyleft--the economics of Linux and other open source software," Information Economics and Policy, Elsevier, vol. 15(1), pages 99-121, March.
  12. Franke, Nikolaus & Hippel, Eric von, 2003. "Satisfying heterogeneous user needs via innovation toolkits: the case of Apache security software," Research Policy, Elsevier, vol. 32(7), pages 1199-1215, July.
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Citations

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Cited by:
  1. Gaudeul, Alexia, 2008. "Consumer welfare and market structure in a model of competition between open source and proprietary software," MPRA Paper 19555, University Library of Munich, Germany.
  2. Alexia Gaudeul, 2008. "Open Source Licensing in Mixed Markets, or Why Open Source Software Does Not Succeed," Working Papers 08-2, Centre for Competition Policy, University of East Anglia.
  3. Bitzer, Jürgen & Geishecker, Ingo, 2010. "Who contributes voluntarily to OSS? An investigation among German IT employees," Research Policy, Elsevier, vol. 39(1), pages 165-172, February.
  4. Bitzer, Jürgen & Schrettl, Wolfram & Schröder, Philipp J.H., 2006. "Intrinsic Motivation versus Signaling in Open Source Software Development," Working Papers 06-7, University of Aarhus, Aarhus School of Business, Department of Economics.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Open source in Wikipedia (English)
  2. Portal:Freie Software/Literatur in Wikipedia (German)

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