Consumer welfare and market structure in a model of competition between open source and proprietary software
I consider a Vickrey-Salop model of spatial product differentiation with quasi-linear utility functions and contrast two modes of production, the proprietary model where entrepreneurs sell software to the users, and the open source model where users participate in software development. I show that the OS model of production may be more efficient from the point of view of welfare that the proprietary model, but that an OS industry is vulnerable to entry by entrepreneurs while a proprietary industry can resist entry by OS projects. A mixed industry where OS and proprietary development methods coexist may exhibit large OS projects cohabiting with more specialized proprietary projects, and is more efficient than the proprietary model of production from the point of view of welfare.
|Date of creation:||29 Oct 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
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.:
- 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.
- Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
- Riccardo Leoncini & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2008. "You Won the Battle. What about the War? A Model of Competition between Proprietary and Open Source Software," Department of Economics Working Papers 0811, Department of Economics, University of Trento, Italia.
- Alberto Alesina & Enrico Spolaore, 1995.
"On the Number and Size of Nations,"
NBER Working Papers
5050, National Bureau of Economic Research, Inc.
- 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.
- Éric Darmon & Thomas Le texier & Dominique Torre, 2011.
"Proprietary or open source software? Winner-takes-all competition, partial adoption and efficiency,"
Revue d'économie industrielle,
De Boeck Université, vol. 0(4), pages 109-140.
- Eric Darmon & Thomas Le Texier & Dominique Torre, 2011. "Proprietary or Open Source Software? Winner-Takes-All Competition, Partial Adoption and Efficiency," Post-Print halshs-00723656, HAL.
- Gaudeul, Alexia & Mathieu, Laurence & Peroni, Chiara, 2008. "Blogs and the Economics of Reciprocal Attention," MPRA Paper 11298, University Library of Munich, Germany.
- Gaudeul Alex, 2007. "Do Open Source Developers Respond to Competition? The LATEX Case Study," Review of Network Economics, De Gruyter, vol. 6(2), pages 1-25, June.
- Alexandre Gaudeul, 2004.
"The LaTeX project: A case study of open-source software,"
- Alex Gaudeul, 2004. "The LaTeX project: A case study of open source software," Industrial Organization 0409010, EconWPA, revised 20 Apr 2005.
- Nicholas Economides & Evangelos Katsamakas, 2006.
"Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry,"
INFORMS, vol. 52(7), pages 1057-1071, July.
- Nicholas Economides & Evangelos Katsamakas, 2005. "Two-sided competition of proprietary vs. open source technology platforms and the implications for the software industry," Working Papers 05-06, NET Institute.
- Nicholas Economides & Evangelos Katsamakas, 2005. "Two-sided competition of proprietary vs. open source technology platforms, and the implications for the software industry," Working Papers 05-02, NET Institute, revised Oct 2005.
- Nicholas Economides & Evangelos Katsamakas, 2004. "Two-sided competition of proprietary vs. open source technology platforms and the implications for the software industry," Working Papers 04-30, New York University, Leonard N. Stern School of Business, Department of Economics.
- Nicholas Economides & Evangelos Katsamakas, 2004. "Two-sided competition of proprietary vs. open source technology platforms and the implications for the software industry," Working Papers 04-22, NET Institute, revised Aug 2004.
- Stefano Comino & Fabio Manenti, 2005. "Government Policies Supporting Open Source Software for the Mass Market," Review of Industrial Organization, Springer, vol. 26(2), pages 217-240, December.
- Alexia Gaudeul, 2008.
"Open Source Licensing in Mixed Markets, or Why Open Source Software Does Not Succeed,"
08-2, Centre for Competition Policy, University of East Anglia.
- Gaudeul, Alexia, 2008. "Open Source Licensing in Mixed Markets, or Why Open Source Software Does Not Succeed," MPRA Paper 19596, University Library of Munich, Germany.
- Besley, Timothy J. & Ghatak, Maitreesh, 2001.
"Government versus Private Ownership of Public Goods,"
CEPR Discussion Papers
2725, C.E.P.R. Discussion Papers.
- Timothy Besley & Maitreesh Ghatak, 2001. "Government Versus Private Ownership of Public Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1343-1372.
- 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.
- Fershtman, Chaim & Gandal, Neil, 2004. "The Determinants of Output Per Contributor in Open Source Projects: An Empirical Examination," CEPR Discussion Papers 4329, C.E.P.R. Discussion Papers.
- Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
- Bruno Frey, 1999. "State Support and Creativity in the Arts: Some New Considerations," Journal of Cultural Economics, Springer, vol. 23(1), pages 71-85, March.
- Harison, Elad & Koski, Heli, 2008. "Does Open Innovation Foster Productivity? Evidence from Open Source Software(OSS) Firms," Discussion Papers 1135, The Research Institute of the Finnish Economy.
- Jeffrey P. Ballou, 2005. "An Examination of the Presence of Ownership Effects in Mixed Markets," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(1), pages 228-255, April.
- Jürgen Bitzer & Philipp J.H. Schröder, 2005. "The Impact of Entry and Competition by Open Source Software on Innovation Activity," Industrial Organization 0512001, EconWPA.
- Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174 Elsevier.
- Vickrey, William S. & Anderson, Simon P. & Braid, Ralph M., 1999. "Spatial competition, monopolistic competition, and optimum product diversity," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 953-963, October.
- Braid, Ralph M., 2004. "Uneven spacing in free-entry equilibrium for spatial product differentiation," Economics Letters, Elsevier, vol. 84(2), pages 155-161, August.
- Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research.
- Y.M. Sharaiha & J.E. Beasley, 1999. "Foreword," Annals of Operations Research, Springer, vol. 86(0), pages 0-0, January.
- 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.
- 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.
- Alex Gaudeul, 2005. "Public provision of a private good: What is the point of the BSD license?," Industrial Organization 0511002, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:19555. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.