Open Source Development in a Differentiated Duopoly

Stephane Verani ()
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Stephane Verani: Department of Economics, The University of Western Australia

No 06-05, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Open source software is released under an open source license giving individuals the right to use, modify, and redistribute freely the programs. This paper proposes a model of differentiated duopoly in which firms invest in the development of proprietary or open source software. The main findings are: (i) firms invest more when the products are substitutes; (ii) for substitute products, firms’ investment in software development is greatest when the software is open source; (iii) for close to perfect complements, firms’ investment in software development is greatest when the software is proprietary; and (iv) for substitute products, investment in open source software yields higher profits than investment in proprietary software.

Pages: 28 pages
Date: 2006
New Economics Papers: this item is included in nep-com, nep-ict, nep-ind and nep-mic
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:06-05

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