This type of model is framed in terms of interaction rules between elements of the model. A computer simulation is used to determine the implications of these rules under various conditions. And, here for a working paper. We focus on the impact that such free goods can have upon a existing, commercial software markets. The point of this work is to put together a model of commercial software markets which is very simple, but can capture the effect of introducing free goods.
Every user has a price ceiling.
The relative importance of these are parameters in the model. Companies reprice based on information from previous two time steps to optimize expected future revenue. There are no marginal costs. The open-source community is modeled as a free source of codes, which has no advertising. Results A map is shown to the right showing some simulation results.