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Dynamic Mixed Duopoly. A Model Motivated by Linux versus Windows

Author

Listed:
  • Casadesus-Masanell Ramón

    (HARVARD BUSINESS SCHOOL)

  • Ghemawat Pankaj

    (HARVARD BUSINESS SCHOOL)

Abstract

This paper analyzes a dynamic mixed duopoly in which a profit-maximizing competitor interacts with a competitor that prices at zero (or marginal cost), with the cumulation of output affecting their relative positions over time. The modeling effort is motivated by interactions between Linux, an open-source operating system, and Microsoft s Windows, and consequently emphasizes demand-side learning effects that generate dynamic scale economies (or network externalities). Analytical characterizations of the equilibrium under such conditions are offered, and some comparative static and welfare effects are examined.

Suggested Citation

  • Casadesus-Masanell Ramón & Ghemawat Pankaj, 2006. "Dynamic Mixed Duopoly. A Model Motivated by Linux versus Windows," Working Papers 201048, Fundacion BBVA / BBVA Foundation.
    • Handle: RePEc:fbb:wpaper:201048
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    Cited by:

    1. Xinyu Hua & Kathryn E. Spier, 2021. "Settling Lawsuits with Pirates," HKUST CEP Working Papers Series 202104, HKUST Center for Economic Policy.

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