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(from Chapter 8: Information and Communication Technologies)
| Full Citation and Abstract
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Title: |
Network economies for open source technologies |
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Author(s): |
Hans-Werner Gottinger |
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Address: |
Institute of Management Science, University of Maastricht (RL), 6200 AN Maastricht, The Netherland hansgottinger @ aol.com |
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Reference: |
WASD 2006 Proceedings pp. 237 - 241 |
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Abstract/ Summary |
We focus on a contestable market with network externalities with an incumbent and an entrant. The incumbent, unlike the entrant, already has an installed base of consumers. We look at decision situations of firms regarding how proprietary they want to make their technology, either through patent protection or through development in Open Source Systems (OSS). We explicitly model the direct and indirect effects of network externalities. For example, more software companies are willing to produce programs for an Operating System (OS) if it has a larger consumer base. This increased competition could lead to an improvement of the quality of the OS. The model predicts that using Open Source Technologies (OST) is likely to enhance the rate of Research and Development (RD) and consequently the quality of the product. An incumbent that would choose this strategy is likely to deter entrance of a newcomer because it can play out its advantage of a larger network. |
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