Abstract
This paper analyzes the impact of network externalities on the competition between open source software (OSS) and proprietary software (PS) in a fully covered market. The installed base and the profit of proprietary software are found increasing at the expense of decreasing user base for OSS. Furthermore, we find that a threshold corresponding to the quality ratio between OSS and proprietary software can be derived such that if the network effect intensity of the OSS is greater than that of the proprietary software multiplied by this threshold value, then OSS benefits from the presence of network externality; Finally, we find that making software products compatible with competing rival is not desirable by proprietary software vendors but favored by OSS venders.
Access provided by Autonomous University of Puebla. Download to read the full chapter text
Chapter PDF
Similar content being viewed by others
References
Bessen, J.: What good is free software?. In: Hahn, R. (ed.) Government Policy Towards Open Source Software. AEI Brookings Joint Center for Regulatory Studies, Washington (2002)
Casadesus-Masanell, R., Ghemawat, P.: Dynamic mixed duopoly: a model motivated by Linux vs. Windows. Management Science 52(7), 1072–1084 (2006)
Chengalur-Smith, S., Sidorova, A.: Survival of open-source projects: a popular ecology perspective. In: Proceedings of the International Conference on Information Systems, pp. 782–787 (2003)
Crowston, K., Annabi, H., Howison, J.: Defining open source software project success. In: Proceedings of the International Conference on Information Systems, pp. 329–340 (2003)
Farrell, J., Saloner, G.: Installed base and compatibility: innovation, product preannouncements, and predation. American Economic Review 76(5), 940–955 (1986)
Fitzgerald, B., Kenny, T.: Open source software in the trenches: lessons from a large-scale OSS implementation. In: Proceedings of the International Conference on Information Systems, pp. 316–326 (2003)
Hann, I.-H., Roberts, J., Slaughter, S.A., Fielding, R.: Economic incentives for participate in open source software projects. In: Proceedings of the International Conference on Information Systems, pp. 365–372 (2002)
Hann, I.-H., Roberts, J., Slaughter, S.A.: Why developers participate in open source software projects: an empirical investigation. In: Proceedings of the International Conference on Information Systems, pp. 821–830 (2004)
Johnson, J.P.: Economics of open source software. Journal of Economics and Management Strategy 11, 627–662 (2002)
Katz, M., Shapiro, C.: Network externalities, competition and compatibility. American Economic Review 75, 420–440 (1985)
Lerner, J., Tirole, J.: The open source movement: key research questions. European Economic Review 45, 819–826 (2001)
Lerner, J., Tirole, J.: Some simple economics of open source. Journal of Industrial Economics 50, 197–234 (2002)
Mustonen, M.: Copyleft – the economics of Linux and other open source software. Information Economic Policy 15, 99–121 (2003)
Rosenberg, D.K.: Open source: The unauthorized white papers. IDG Book Worldwide, Inc. (2000)
Sagers, G.W.: The Influence of network governance factors on success in open source software development projects. In: Proceedings of the International Conference on Information Systems, pp. 427–438 (2004)
Wheeler, D.A.: Why open source software/free software (OSS/FS)? Look at the number! (2003), http://www.dwheeler.com/oss_fs_why.html
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2010 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Liu, Y., Cheng, H.K. (2010). Open Source versus Proprietary Software: A Case of Fully Covered Market. In: Sharman, R., Rao, H.R., Raghu, T.S. (eds) Exploring the Grand Challenges for Next Generation E-Business. WEB 2009. Lecture Notes in Business Information Processing, vol 52. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-17449-0_28
Download citation
DOI: https://doi.org/10.1007/978-3-642-17449-0_28
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-17448-3
Online ISBN: 978-3-642-17449-0
eBook Packages: Computer ScienceComputer Science (R0)