Optimal Firm Contributions to Open Source Software
MANAGEMENT SCIENCE AND ECONOMICS, Christophe Deissenberg and Richard F. Hartl, eds., pp. 197-212, Springer, 2005
25 Pages Posted: 12 May 2008 Last revised: 7 Oct 2008
This paper examines open source software development in a competitive environment. The quality of open source software improves over time based upon contributions by firms and users. A firm's decision to contribute is interesting because it also augments competitors' software quality in future periods subject to compatibility considerations with their existing software. A differential game model is developed to understand why firms are increasingly involved in open source software development by determining the optimal contributions and software quality over time. We obtain a closed-loop Nash equilibrium solution. Examples are given to derive insights from this model.
Keywords: Open sourcd software, dynamic games, game theory, differential games, optimal control, close-loop Nash equilibrium, software quality
JEL Classification: C61, D42, M00
Suggested Citation: Suggested Citation