GENERAL PUBLIC LICENSING AND THE INTENSITY OF AGGREGATE SOFTWARE DEVELOPMENT

Maggie Chen, Murat Iyigun and Keith Maskus

Economics of Innovation and New Technology, 2007, vol. 16, issue 6, 451-466

Abstract: We develop a theoretical model in which the sophistication of technologies improves over time due to research and development (R&D) undertaken by software developers in two sectors. In the commercial sector, R&D intensity is driven by economic incentives, whereas in the sector using the General Public License (GPL), it is driven by the preference-based labor supply of individuals. A higher amount of GPL labor allocation generates equilibrium effects that adversely affect commercial software development. When the degree of imitation in the GPL sector is relatively higher than in the commercial sector, or the commercial sector has increasing returns of a limited degree, the R&D intensity in the commercial sector would decline by more than any increases in R&D intensity in the GPL sector. Thus, aggregate R&D intensity in the long run would be reduced. Numerical simulation indicates that this outcome pertains under realistic parameter ranges.

Keywords: General Public Licensing; Proprietary software; Innovation intensity (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (1)

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DOI: 10.1080/10438590600914452

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