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Dual licensing in open source software markets

  • Comino, Stefano
  • Manenti, Fabio M.

In this paper we present a theoretical model to study the characteristics and the commercial sustainability of dual licensing, an open source (OS) business strategy that has gained popularity among software vendors. With dual licensing, a firm releases the same software product under both a traditional proprietary license and an open source one. We show that the decision to employ a dual licensing strategy occurs whenever the feedbacks of the open source community are valuable enough compared to the quality of the software that the firm is able to develop in-house. Our analysis points to the central role of an appropriate managing of OS licenses in order to balance the pros and cons of “going open source” and to make this versioning strategy viable for software vendors; our analysis also suggests a possible explanation for the observed proliferation of open source licenses.

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File URL: http://www.sciencedirect.com/science/article/pii/S016762451100028X
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Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 23 (2011)
Issue (Month): 3 ()
Pages: 234-242

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Handle: RePEc:eee:iepoli:v:23:y:2011:i:3:p:234-242
DOI: 10.1016/j.infoecopol.2011.07.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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  1. Justin Pappas Johnson, 2002. "Open Source Software: Private Provision of a Public Good," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 637-662, December.
  2. Mikko Mustonen, 2005. "When Does a Firm Support Substitute Open Source Programming?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 121-139, 03.
  3. Gayer, Amit & Shy, Oz, 2003. "Internet and peer-to-peer distributions in markets for digital products," Economics Letters, Elsevier, vol. 81(2), pages 197-203, November.
  4. Koski, Heli, 2007. "Private-collective Software Business Models: Cordinatitons and Commercialization via Licensing," Discussion Papers 1091, The Research Institute of the Finnish Economy.
  5. Stefano Comino & Fabio Manenti & Marialaura Parisi, 2007. "From Planning to Mature: on the Determinants of Open Source Take-Off," "Marco Fanno" Working Papers 0035, Dipartimento di Scienze Economiche "Marco Fanno".
  6. Josh Lerner & Jean Tirole, 2002. "The Scope of Open Source Licensing," NBER Working Papers 9363, National Bureau of Economic Research, Inc.
  7. Nicholas Economides, 1997. "Network Externalities, Complementarities, and Invitations to Enter," Industrial Organization 9701004, EconWPA.
  8. Lanzi, Diego, 2009. "Competition and open source with perfect software compatibility," Information Economics and Policy, Elsevier, vol. 21(3), pages 192-200, August.
  9. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
  10. Chaim Fershtman & Neil Gandal, 2007. "Open source software: Motivation and restrictive licensing," International Economics and Economic Policy, Springer, vol. 4(2), pages 209-225, August.
  11. Comino, Stefano & Manenti, Fabio M. & Parisi, Maria Laura, 2007. "From planning to mature: On the success of open source projects," Research Policy, Elsevier, vol. 36(10), pages 1575-1586, December.
  12. Paul Belleflamme, 2005. "Versioning in the Information Economy: Theory and Applications," CESifo Economic Studies, CESifo, vol. 51(2-3), pages 329-358.
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