Coexistence of proprietary and open‐source firms under product differentiation

Murat Yılmaz

Managerial and Decision Economics, 2022, vol. 43, issue 8, 4153-4166

Abstract: Open‐source technologies have been proven to be a crucial alternative to the proprietary production. We consider duopolistic quantity competition, under product differentiation, with a choice of being open source or proprietary, and characterize the equilibrium for all possible degrees of product differentiation. For small enough differentiation between two different types of firms, an open source and a proprietary firm coexist. For large enough differentiation between two different types of firms, the firm types in the equilibrium depend on the differentiation between same type firms. We also show that the equilibrium outcome is not socially efficient for some parameter values.

Date: 2022
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https://doi.org/10.1002/mde.3663

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:8:p:4153-4166

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