Open Source vs Closed Source Software: Public Policies in the Software Market

Stefano Comino () and Fabio Manenti ()

Industrial Organization from University Library of Munich, Germany

Abstract: This paper analyses the impact of public policies supporting open source software (OSS). Users can be divided between those who know about the existence of OSS, the "informed" adopters, and the "uninformed" ones; the presence of uniformed users yields to market failures that justify government intervention. We study three policies: i) mandatory adoption, when government forces public agencies, schools and universities to adopt OSS, ii) information campaign, when the government informs the uninformed users about the existence and the characteristics of OSS and, iii) subsidisation, when consumers are payed a subsidy when adopting OSS. We show that the second policy enhances welfare, the third is always welfare decreasing while mandatory adoption can be either good or bad for society depending on the number of informed and uninformed adopters. We extend the model to the presence of network effects and we show that strong externalities require "drastic" policies.

Keywords: software market; open source software; mandatory adoption; information campaign; subsidisation; network externalities (search for similar items in EconPapers)
JEL-codes: L51 L63 O38 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2003-06-16
New Economics Papers: this item is included in nep-ino and nep-net
Note: Type of Document - pdf; prepared on Latex; to print on PostScript; pages: 33; figures: included
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0306001

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