Private Provision of a Complementary Public Good

Richard Schmidtke

No 4, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: For several years, an increasing number of ¯rms are investing in Open Source Software (OSS). While improvements in such a non- excludable public good cannot be appropriated, companies can bene¯t indirectly in a complementary proprietary segment. We study this incentive for investment in OSS. In particular we ask how (1) market entry and (2) public investments in the public good a®ects the ¯rms' production and pro¯ts. Surprisingly, we ¯nd that there exist cases where incumbents bene¯t from market entry. Moreover, we show the counter-intuitive result that public spending does not necessarily lead to a decreasing voluntary private contribution.

Keywords: Open Source Software; Private Provision of Public Goods; Cournot- Nash Equilibrium; Complements; Market Entry (search for similar items in EconPapers)
JEL-codes: C72 L13 L86 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2006-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:004_schmidtke

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