The Jukebox Mode of Innovation - A Model of Commercial Open Source Development

Joachim Henkel ()

No 4507, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this Paper, I explore the circumstances under which innovation processes without secrecy or intellectual property protection are viable, and where free revealing of innovations is a profit-maximizing strategy. Motivated by an empirical study of embedded Linux, I develop a duopoly model of quality competition. Firms require two complementary technologies as inputs, but differ with respect to the relative importance of these technologies. I find that a regime with compulsory revealing can lead to higher product qualities and higher profits than a proprietary regime. When the decision to reveal is endogenized, equilibria with voluntary revealing arise, again superior to the proprietary outcome.

Keywords: Innovation; Development collaboration; Open source software; Embedded linux (search for similar items in EconPapers)
JEL-codes: L11 L15 L86 (search for similar items in EconPapers)
Date: 2004-07
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Citations: View citations in EconPapers (15)

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Working Paper: The Jukebox Mode of Innovation - a Model of Commercial Open Source Development (2006)
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