Vol. 5 No. 3 (2017): BUSINESS & MANAGEMENT STUDIES: AN INTERNATIONAL JOURNAL
Articles

COEXISTENCE OF PRIVATE FIRMS AND OPEN SOURCE FIRMS UNDER SPILLOVERS AND CONSUMER BIAS

PDF
  • Murat YILMAZ
Murat YILMAZ
Boğaziçi University
DOI: https://doi.org/10.15295/bmij.v5i3.155

Published 2017-12-19

How to Cite

YILMAZ, M. (2017). COEXISTENCE OF PRIVATE FIRMS AND OPEN SOURCE FIRMS UNDER SPILLOVERS AND CONSUMER BIAS. Business & Management Studies: An International Journal, 5(3), 808–825. https://doi.org/10.15295/bmij.v5i3.155

Abstract

Open source technologies have been an important divergence from the private produc- tion, and some markets have accommodated both open source firms and private firms. We explore the conditions under which such a coexistence of both type of firms can be seen. Through a simple and tractable game theoretical model, with spillovers on the open source production and positive consumer bias for the privately produced good, we analyze the conditions for which, in the equilibrium, a private firm and an open source firm share the market. We find that for large enough consumer bias, the two types cannot coexist, however when the consumer bias is relatively low and the spillover effect is not too strong, then we get a coexistence result. 

PDF

Downloads

Download data is not yet available.

References

  1. Admati, A. R. and Perry, M. (1991), “Joint Projects without Commitment”, The Review of Economic Studies, 58, 259-276.
  2. Aghion, P., Harris, C., Howitt, P. and Vickers, J. (2001), “Competition, Imitation and Growth with Step-by-Step Innovation”, Review of Economic Studies, 68, 467-492.
  3. Akbulut, S and Yılmaz, M. (2015), “A Dynamic Model of Mixed Duopolistic Competition: Open Source vs. Proprietary Innovation”, Theoretical Economics Letters, 5, 730-738.
  4. Aoki, R. (1991), “R&D Competition for Product Innovation: An Endless Race”, The American Economic Review, 81, 252-256.
  5. Atal, V. and Shankar, K. (2014), “Open Source Software: Competition with A Public Good”, Atlantic Economic Journal, 42(3), 333-345.
  6. Athey, S. and Ellison, G. (2014), “Dynamics of Open Source Movements”, Journal of Economics & Management Strategy, 23(2), 294-316.
  7. Bitzer, J. (2004), “Commercial versus open source software: the role of product hetero- geneity in competition”, Economic Systems, 28, 369-381.
  8. Bitzer, J., Schrettl, W. and Schröder, P. J. H. (2007), “Intrinsic motivation in open source software development”, Journal of Comparative Economics, 35, 160-169.
  9. Casadesus-Masanell, R. and Ghemawat, P. (2006), “Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows”, Management Science, 52(7), 1072-1084.
  10. Casadesus-Masanell, R. and Llanes, G. (2011), “Mixed Source”, Management Science, 57(7), 1212-1230.
  11. Caulkins, J. P., Feichtinger, G., Grass, D., Hartl, R. F., Kort, P. M., and Seidl, A. (2013), “When to make proprietary software open source”, Journal of Economic Dynamics and Control, 37, 1182-1194.
  12. Economides, N. and Katsamakas, E. (2006), “Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry”, Management Science, 52(7), 1057-1071.
  13. Erkal, N. and Minehart, D. (2014), “Optimal Technology Sharing Strategies in Dynamic Games of R&D”, Journal of Economics & Management Strategy, 23(1), 149-177.
  14. Fershtman, C. and Markovich, S. (2010), “Patents, imitation and licensing in an asymmet- ric dynamic R&D race”, International Journal of Industrial Organization, 28(2), 113-126.
  15. Grossman, G. M. and Shapiro, C. (1987), “Dynamic R&D Competition”, The Economic Journal, 97, 372-387.
  16. Haruvy, E., Sethi, S. P. and Zhou, J. (2008),“Open Source Development with a Commer- cial Complementary Product or Service”, Production and Operations Management, 17(1), 29-43
  17. Hasnas, I., Lambertini, L. and Palestini, A. (2014), “Open Innovation in a dynamic Cournot duopoly”, Economic Modelling, 36, 79-87.
  18. Jaisingh, J, See-To, E. W. K. and Tam K. Y. (2014), “The Impact of Open Source Software on the Strategic Choices of Firms Developing Proprietary Software”, Journal of Management Information Systems, 25(3), 241-276.
  19. Johnson, J. P. (2002), “Open Source Software: Private Provision of a Public Good”, Journal of Economics & Management Strategy, 11(4), 637-662.
  20. Kort, P. M. and Zaccour, G. (2011), “When Should a Firm Open its Source Code: A Strategic Analysis”, Production and Operations Management, 20(6), 877-888.
  21. Lerner, J., Pathak, P. A. and Tirole, J. (2006), “The Dynamics of Open-Source Contrib- utors”, The American Economic Review, 96(2), 114-118.
  22. Lerner, J. and Tirole, J. (2005), “The Economics of Technology Sharing: Open Source and Beyond”, The Journal of Economic Perspectives, 19(2), 99-120.
  23. Lerner, J. and Tirole, J. (2002), “Some Simple Economics of Open Source”, Journal of Industrial Economics, 50(2), 197-234.
  24. Li, C. and Ji, C. (2010), “Innovation, licensing, and price vs. quantity competition”, Economic Modelling, 27, 746-754.
  25. Llanes, G. and de Elejalde, R. (2013), “Industry equilibrium with open-source and pro- prietary firms”, International Journal of Industrial Organization, 31, 36-49.
  26. Marx, L. E. and Matthews, S. A. (2000), “Dynamic Voluntary Contribution to a Public Project”, The Review of Economic Studies, 67, 327-358.
  27. Modica, S. (2012), “Open Source without Free-Riding”, Economia politica, 2, 247-260.
  28. Mustonen, M. (2005), “When Does a Firm Support Substitute Open Source Program- ming?”, Journal of Economics & Management Strategy, 14(1), 121-139.
  29. Reisinger, M., Ressner, L., Schmidtke, R. and Thomes, T. P. (2014), “Crowding-in of com- plementary contributions to public goods: Firm investment into open source software”, Journal of Economic Behavior & Organization, 106, 78-94.
  30. Suh, J. and Yılmaz, M. (2017), “Economics of Open Source Technology: A Dynamic Approach”, working paper.
  31. Yıldırım, H. (2006), “Getting the ball rolling: Voluntary contributions to a large-scale public project”, Journal of Public Economic Theory, 8(4), 503-528.