A Model of corporate donations to open source under hardware–software complementarity
In recent years there has been an increasing diffusion of open source projects, as well as an increasing interest among scholars on the topic. Open source software (OSS) is developed by communities of programmers and users, usually sponsored by private firms; OSS is available in the public domain and redistributed for free. In this paper a model of open and closed source software (CSS) competition will be presented. Hardware and software are complement goods and OSS is financed by hardware firms. There is a differentiated oligopoly of hardware–software bundles, in which firms compete in prices. Results are several; positive (hardware firm) contributions are possible, although, they are not socially optimal. OSS availability has a positive impact on social welfare, and on hardware firms’ profits and prices. CSS firm’s price and profits decrease when OSS is available. The effect on the price of the hardware–CSS bundle depends on demand own–price elasticity. The model can explain the increasing participation in open source projects of embedded device producers. Hardware firms’ incentives to contribute to OSS development process are greater when there is a relatively intensive competition among producers. Hardware firms use OSS to decrease the software monopolist’s market power.
|Date of creation:||04 Jul 2012|
|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
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.:
- Nicholas Economides & Evangelos Katsamakas, 2005.
"Two-sided competition of proprietary vs. open source technology platforms, and the implications for the software industry,"
05-02, NET Institute, revised Oct 2005.
- Nicholas Economides & Evangelos Katsamakas, 2006. "Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry," Management Science, 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, 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.
- 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.
- 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.
- Dalle, Jean-Michel & Jullien, Nicolas, 2003.
"'Libre' software: turning fads into institutions?,"
Elsevier, vol. 32(1), pages 1-11, January.
- Jean-Michel Dalle & Nicolas Jullien, 2003. ""Libre" software : turning fads into institutions?," Post-Print hal-00287967, HAL.
- Economides, Nicholas & Salop, Steven C, 1992. "Competition and Integration among Complements, and Network Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 40(1), pages 105-23, March.
- Josh Lerner & Jean Tirole, 2004.
"The Economics of Technology Sharing: Open Source and Beyond,"
NBER Working Papers
10956, National Bureau of Economic Research, Inc.
- Josh Lerner & Jean Tirole, 2005. "The Economics of Technology Sharing: Open Source and Beyond," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 99-120, Spring.
- Jay Pil Choi, 2008. "MERGERS WITH BUNDLING IN COMPLEMENTARY MARKETS -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 553-577, 09.
- Ramon Casadesus-Masanell & Pankaj Ghemawat, 2006. "Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows," Management Science, INFORMS, vol. 52(7), pages 1072-1084, July.
- Cellini, Roberto & Lambertini, Luca & Ottaviano, Gianmarco I. P., 2004. "Welfare in a differentiated oligopoly with free entry: a cautionary note," Research in Economics, Elsevier, vol. 58(2), pages 125-133, June.
- Lanzi, Diego, 2009. "Competition and open source with perfect software compatibility," Information Economics and Policy, Elsevier, vol. 21(3), pages 192-200, August.
- Jurgen Bitzer & Philipp Schroder, 2007. "Open Source Software, Competition and Innovation," Industry and Innovation, Taylor & Francis Journals, vol. 14(5), pages 461-476.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:39849. 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.