Competitive Implications of Software Open-Sourcing

Forthcoming, Decision Support Systems

38 Pages Posted: 29 Jul 2008 Last revised: 12 Jun 2014

See all articles by Jai Asundi

Jai Asundi

Center for Study of Science, Technology and Policy

Octavian Carare

Federal Communications Commission (FCC)

Kutsal Dogan

University of Texas at Dallas - Naveen Jindal School of Management

Date Written: August 5, 2008

Abstract

This paper is concerned with the economic trade-offs associated with open-sourcing, the business strategy of releasing free open-source versions of commercial software products. The effect of the release of open-source versions on the customers' perception of products is an important determinant of open-sourcing outcomes. We model open-sourcing as a strategic option for firms that compete in the market for software products. Of particular importance in our model is the effect of open-sourcing on customer values and the possibility for better customization offered by the open-source products. We show that open-sourcing can arise as an equilibrium outcome in our simple two-stage game. If the enhancement of customer values from open-sourcing is moderate or high, firms may find it optimal to release open-source versions of their products.

Suggested Citation

Asundi, Jai and Carare, Octavian and Dogan, Kutsal, Competitive Implications of Software Open-Sourcing (August 5, 2008). Forthcoming, Decision Support Systems. Available at SSRN: https://ssrn.com/abstract=1185374 or http://dx.doi.org/10.2139/ssrn.1185374

Jai Asundi

Center for Study of Science, Technology and Policy ( email )

Mayura Street, Nagashetyhalli
RMV Extension Stage 2
Bangalore, 560094
India
+918066902542 (Phone)

HOME PAGE: http://www.cstep.in

Octavian Carare

Federal Communications Commission (FCC) ( email )

445 12th Street SW
Rm. TW-B204
Washington, DC 20554
United States

Kutsal Dogan (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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