Industry equilibrium with open source and proprietary firms
By: Gastón Llanes, Ramior de Elejalde
Contributors: De Elejalde, Ramiro; Harvard Business School
Series: Working paper / Harvard Business School -- 09-149; Working paper (Harvard Business School) -- 09-149.
Publisher: Harvard Business School
Published: 2009
Place of publication: [Boston]
Language: eng
Number of pages: 46
Description: We present a model of industry equilibrium to study the coexistence of Open Source (OS) and Proprietary (P) firms. Two novel aspects of the model are: (1) participation in OS arises as the optimal decision of profit-maximizing firms, and (2) OS and P firms may (or may not) coexist in equilibrium. Firms decide their type and investment in R&D, and sell packages composed of a primary good (like software) and a complementary private good. The only difference between both kinds of firms is that OS share their technological advances on the primary good, while P keep their innovations private. The main contribution of the paper is to determine conditions under which OS and P coexist in equilibrium. Interestingly, this equilibrium is characterized by an asymmetric market structure, with a few large P firms and many small OS firms.
Notes: "June 2009"--Publisher's website.

Includes bibliographical references.