Dynamic mixed duopoly: A model motivated by Linux vs. Windows

Ramon Casadesus-Masanell () and Pankaj Ghemawat ()
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Ramon Casadesus-Masanell: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Pankaj Ghemawat: Harvard Business School

No D/519, IESE Research Papers from IESE Business School

Abstract: This paper analyzes a dynamic mixed duopoly in which a profit-maximizing competitor interacts with a competitor that prices at zero (or marginal cost), with the cumulation of output affecting their relative positions over time. The modeling effort is motivated by interactions between Linux, an open-source operating system, and Microsoft's Windows in the computer server segment, and consequently emphasizes demand-side learning effects that generate dynamic scale economies (or network externalities). Analytical characterizations of the equilibrium under such conditions are offered, and some comparative static and welfare effects are examined.

Keywords: open-source software; network effects; microsoft; linux; competitive dynamics; strategy (search for similar items in EconPapers)
Pages: 40 pages
Date: 2003-09-23
New Economics Papers: this item is included in nep-ind and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:ebg:iesewp:d-0519

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