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General Public Licensing And The Intensity Of Aggregate Software Development

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  • Maggie X. Chen
  • Murat Iyigun
  • Keith E. Maskus

Abstract

We develop a theoretical model in which the sophistication of technologies improves over time due to research and development (R&D) undertaken by software developers in two sectors. In the commercial sector, R&D intensity is driven by economic incentives, whereas in the sector using the General Public License (GPL), it is driven by the preference-based labor supply of individuals. A higher amount of GPL labor allocation generates equilibrium effects that adversely affect commercial software development. When the degree of imitation in the GPL sector is relatively higher than in the commercial sector, or the commercial sector has increasing returns of a limited degree, the R&D intensity in the commercial sector would decline by more than any increases in R&D intensity in the GPL sector. Thus, aggregate R&D intensity in the long run would be reduced. Numerical simulation indicates that this outcome pertains under realistic parameter ranges.

Suggested Citation

  • Maggie X. Chen & Murat Iyigun & Keith E. Maskus, 2007. "General Public Licensing And The Intensity Of Aggregate Software Development," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(6), pages 451-466.
    • Handle: RePEc:taf:ecinnt:v:16:y:2007:i:6:p:451-466
    DOI: 10.1080/10438590600914452
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    References listed on IDEAS

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    1. Josh Lerner, 2005. "The Scope of Open Source Licensing," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(1), pages 20-56, April.
    2. Jean-Michel Dalle & Paul David, 2005. "The Allocation of Software Development Resources In ‘Open Source’ Production Mode," Industrial Organization 0502011, University Library of Munich, Germany.
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    Cited by:

    1. Engelhardt, Sebastian v. & Freytag, Andreas, 2013. "Institutions, culture, and open source," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 90-110.

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