Consumer Welfare and Market Structure in a Model of Competition between Open Source and Proprietary Software

CCP Working Paper No. 08-31

31 Pages Posted: 29 Oct 2008

See all articles by Alexia Gaudeul

Alexia Gaudeul

Georg-August-Universität Göttingen

Date Written: October 29, 2008

Abstract

I consider a Vickrey-Salop model of spatial product differentiation with quasi-linear utility functions and contrast two modes of production, the proprietary model where entrepreneurs sell software to the users, and the open source model where users participate in software development. I show that the OS model of production may be more efficient from the point of view of welfare that the proprietary model, but that an OS industry is vulnerable to entry by entrepreneurs while a proprietary industry can resist entry by OS projects. A mixed industry where OS and proprietary development methods coexist may exhibit large OS projects cohabiting with more specialized proprietary projects, and is more efficient than the proprietary model of production from the point of view of welfare.

Keywords: open source, proprietary, software industry, copyright, non-profit organization, mixed market, welfare, spatial product differentiation

JEL Classification: D23, H44, L17, L22, L86, O34, O38

Suggested Citation

Gaudeul, Alexia, Consumer Welfare and Market Structure in a Model of Competition between Open Source and Proprietary Software (October 29, 2008). CCP Working Paper No. 08-31. Available at SSRN: https://ssrn.com/abstract=1291682 or http://dx.doi.org/10.2139/ssrn.1291682

Alexia Gaudeul (Contact Author)

Georg-August-Universität Göttingen ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49 (0) 551 39 7333 (Phone)

HOME PAGE: http://agaudeul.free.fr

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
151
Abstract Views
1,913
rank
204,469
PlumX Metrics