Coexistence and Market Tipping in a Diffusion Model of Open Source vs. Proprietary Software

28 Pages Posted: 5 Jun 2008 Last revised: 31 Jul 2012

See all articles by Riccardo Leoncini

Riccardo Leoncini

University of Bologna - Department of Economics; Ceris-CNR

Francesco Rentocchini

Southampton Business School, University of Southampton

Giuseppe Vittucci Marzetti

University of Milano-Bicocca - Department of Sociology and Social Research

Date Written: November 5, 2010

Abstract

A large number of studies has been canvassed by the growing rates of diffusion of Open Source Software. However, a formal analysis of the process of competition between open–source and proprietary software is still missing. We propose an epidemic model of innovation diffusion to deal with the different factors (profits for proprietary software and developers’ motivations for open–source software) upon which such a process of competition ultimately depends. Moreover, we add network effects and switching costs, together with the endogenisation of the parameters of the speed of dffusion influencing the final outcome. We show the conditions for an asymptotically stable equilibrium to exist, where both softwares coexist. When the propagation coefficient is endogenous, winner–take–all solutions are also likely.

Keywords: Increasing returns, Model of diffusion, Open-source software, Technological competition

JEL Classification: L17, L86, O33

Suggested Citation

Leoncini, Riccardo and Rentocchini, Francesco and Vittucci Marzetti, Giuseppe, Coexistence and Market Tipping in a Diffusion Model of Open Source vs. Proprietary Software (November 5, 2010). Available at SSRN: https://ssrn.com/abstract=1140783 or http://dx.doi.org/10.2139/ssrn.1140783

Riccardo Leoncini

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, BO 40125
Italy
+39 051 2092654 (Phone)
+39 051 2092670 (Fax)

HOME PAGE: http://www2.dse.unibo.it/leoncini/leoncini.html

Ceris-CNR ( email )

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Torino, TO 10121
Italy

Francesco Rentocchini

Southampton Business School, University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Giuseppe Vittucci Marzetti (Contact Author)

University of Milano-Bicocca - Department of Sociology and Social Research ( email )

via Bicocca degli Arcimboldi, 8
Milano, MI 20126
Italy

HOME PAGE: http://https://www.unimib.it/giuseppe-vittucci-marzetti

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