Private Provision of a Complementary Public Good

Richard Schmidtke

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: For several years, an increasing number of firms are investing in Open Source Software (OSS). While improvements in such a non-excludable public good cannot be appropriated, companies can benefit 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 affects the firms' production and profits. Surprisingly, we find that there exist cases where incumbents benefit 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)
Date: 2006-06
New Economics Papers: this item is included in nep-mic, nep-net and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:964

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