IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpio/0512001.html
   My bibliography  Save this paper

The Impact of Entry and Competition by Open Source Software on Innovation Activity

Author

Listed:
  • Jürgen Bitzer

    (Free University Berlin)

  • Philipp J.H. Schröder

    (Aarhus School of Business)

Abstract

This paper presents the stylized facts of open source software innovation and provides empirical evidence on the impact of increased competition by OSS on the innovative activity in the software industry. Furthermore, we introduce a simple formal model that captures the innovation impact of OSS entry by examining a change in market structure from monopoly to duopoly under the assumption that software producers compete in technology rather than price or quantities. The paper identifies a pro-innovative effect of OSS competition.

Suggested Citation

  • Jürgen Bitzer & Philipp J.H. Schröder, 2005. "The Impact of Entry and Competition by Open Source Software on Innovation Activity," Industrial Organization 0512001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0512001
    Note: Type of Document - pdf; pages: 38
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0512/0512001.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Josh Lerner & Jean Tirole, 2002. "Some Simple Economics of Open Source," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 197-234, June.
    3. Timothy F. Bresnahan & Shane Greenstein, 1999. "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 1-40, March.
    4. Bitzer, Jurgen & Schrettl, Wolfram & Schroder, Philipp J.H., 2007. "Intrinsic motivation in open source software development," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 160-169, March.
    5. Hertel, Guido & Niedner, Sven & Herrmann, Stefanie, 2003. "Motivation of software developers in Open Source projects: an Internet-based survey of contributors to the Linux kernel," Research Policy, Elsevier, vol. 32(7), pages 1159-1177, July.
    6. Bitzer, Jurgen & Schroder, Philipp J.H., 2005. "Bug-fixing and code-writing: The private provision of open source software," Information Economics and Policy, Elsevier, vol. 17(3), pages 389-406, July.
    7. O'Mahoney, Siobhán & Ferraro, Fabrizio, 2004. "Managing the boundary of an 'open' project," IESE Research Papers D/537, IESE Business School.
    8. 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.
    9. Franke, Nikolaus & Shah, Sonali, 2003. "How communities support innovative activities: an exploration of assistance and sharing among end-users," Research Policy, Elsevier, vol. 32(1), pages 157-178, January.
    10. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    11. Mustonen, Mikko, 2003. "Copyleft--the economics of Linux and other open source software," Information Economics and Policy, Elsevier, vol. 15(1), pages 99-121, March.
    12. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexia Gaudeul, 2008. "Consumer Welfare and Market Structure in a Model of Competition Between Open Source and Proprietary Software," Working Papers 08-31, Centre for Competition Policy, University of East Anglia.
    2. Bitzer, Jürgen & Geishecker, Ingo, 2010. "Who contributes voluntarily to OSS? An investigation among German IT employees," Research Policy, Elsevier, vol. 39(1), pages 165-172, February.
    3. 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.
    4. Bitzer, Jürgen & Schrettl, Wolfram & Schröder, Philipp J.H., 2006. "Intrinsic Motivation versus Signaling in Open Source Software Development," Working Papers 06-7, University of Aarhus, Aarhus School of Business, Department of Economics.
    5. German Lambardi, 2009. "Software Innovation and the Open Source threat," Working Papers 09-15, NET Institute, revised Sep 2009.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bitzer, Jürgen & Schröder, Philipp J.H., 2005. "The Impact of Entry and Competition by Open Source Software on Innovation," Working Papers 2005-12, University of Aarhus, Aarhus School of Business, Department of Management.
    2. Bitzer, Jürgen & Geishecker, Ingo, 2010. "Who contributes voluntarily to OSS? An investigation among German IT employees," Research Policy, Elsevier, vol. 39(1), pages 165-172, February.
    3. Cerquera Dussán, Daniel & Müller, Bettina, 2009. "Open Source, ICT infrastructure and firm performance," ZEW Discussion Papers 09-089, ZEW - Leibniz Centre for European Economic Research.
    4. Bitzer, Jurgen & Schroder, Philipp J.H., 2005. "Bug-fixing and code-writing: The private provision of open source software," Information Economics and Policy, Elsevier, vol. 17(3), pages 389-406, July.
    5. Engelhardt, Sebastian v. & Freytag, Andreas, 2013. "Institutions, culture, and open source," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 90-110.
    6. Gauguier, Jean-Jacques, 2009. "L’industrialisation de l’Open Source," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/4388 edited by Toledano, Joëlle, July.
    7. Bitzer, Jurgen & Schrettl, Wolfram & Schroder, Philipp J.H., 2007. "Intrinsic motivation in open source software development," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 160-169, March.
    8. Joachim Henkel & Eric von Hippel, 2005. "Welfare Implications of User Innovation," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 73-87, January.
    9. von Hippel, Eric, 2010. "Open User Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 411-427, Elsevier.
    10. Boudreau, Kevin J. & Lakhani, Karim R., 2015. "“Open” disclosure of innovations, incentives and follow-on reuse: Theory on processes of cumulative innovation and a field experiment in computational biology," Research Policy, Elsevier, vol. 44(1), pages 4-19.
    11. 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.
    12. Lars Bo Jeppesen & Lars Frederiksen, 2006. "Why Do Users Contribute to Firm-Hosted User Communities? The Case of Computer-Controlled Music Instruments," Organization Science, INFORMS, vol. 17(1), pages 45-63, February.
    13. Francesco Paolo Appio & Antonella Martini & Silvia Massa & Stefania Testa, 2016. "Unveiling the intellectual origins of Social Media-based innovation: insights from a bibliometric approach," Scientometrics, Springer;Akadémiai Kiadó, vol. 108(1), pages 355-388, July.
    14. Schulz, Celine, 2006. "The Secret to Successful User Communities: An Analysis of Computer Associates’ User Groups," Discussion Papers in Business Administration 1257, University of Munich, Munich School of Management.
    15. Bitzer, Jürgen & Schrettl, Wolfram & Schröder, Philipp J.H., 2006. "Intrinsic Motivation versus Signaling in Open Source Software Development," Working Papers 06-7, University of Aarhus, Aarhus School of Business, Department of Economics.
    16. Osterloh, Margit & Rota, Sandra, 2007. "Open source software development--Just another case of collective invention?," Research Policy, Elsevier, vol. 36(2), pages 157-171, March.
    17. de Jong, Jeroen P.J. & Gillert, Nils Lennart & Stock, Ruth M., 2018. "First adoption of consumer innovations: Exploring market failure and alleviating factors," Research Policy, Elsevier, vol. 47(2), pages 487-497.
    18. Alexia Gaudeul, 2008. "Open Source Licensing in Mixed Markets, or Why Open Source Software Does Not Succeed," Working Papers 08-2, Centre for Competition Policy, University of East Anglia.
    19. Ruo-Yu Liang & Wei Guo & Ling-Hao Zhang & Lei Wang, 2019. "Investigating Sustained Participation in Open Design Community in China: The Antecedents of User Loyalty," Sustainability, MDPI, Open Access Journal, vol. 11(8), pages 1-19, April.
    20. Zaggl, Michael A., 2017. "Manipulation of explicit reputation in innovation and knowledge exchange communities: The example of referencing in science," Research Policy, Elsevier, vol. 46(5), pages 970-983.

    More about this item

    Keywords

    open source software; innovation; strategic interaction;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Portal:Freie Software/Literatur in Wikipedia German

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpio:0512001. 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: . General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.