Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights

30 Pages Posted: 19 Jun 2009

See all articles by Sebastian von Engelhardt

Sebastian von Engelhardt

University of Jena - Economics Department

Sushmita Swaminathan

affiliation not provided to SSRN

Date Written: June 1, 2008

Abstract

There is considerable debate regarding the use of intellectual property rights (IPR) to spur innovation in the software industry. In this paper we focus on the choice of intellectual property right regimes and industry growth. We begin by developing a growth optimal mixture of open source and closed source software. This optimal scenario is then used as a basis to examine the co-existence of open and closed source software within various institutional frameworks ranging from no protection, copyright to patent protection. Such an analysis is beneficial as it enables an objective comparison of the three scenarios under the assumption that both copyrights and patents serve the purpose for which they were designed. Our analysis, based on the existence or absence of spillovers, confirms that a co-existence is growth optimal for the industry. Further, we find that the move from no protection to copyright protection increases the maximum growth rate. However, despite assuming properly functioning patents, the benefits of moving from copyright to patent protection are less clear.

Keywords: Intellectual Property Rights, software, open source, spillovers, co-existence, innovative growth

JEL Classification: L17, L86, O31, O34, O41, O43

Suggested Citation

Engelhardt, Sebastian von and Swaminathan, Sushmita, Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights (June 1, 2008). DIW Berlin Discussion Paper No. 799, Available at SSRN: https://ssrn.com/abstract=1420774 or http://dx.doi.org/10.2139/ssrn.1420774

Sebastian von Engelhardt (Contact Author)

University of Jena - Economics Department ( email )

Carl-Zeiss-Str. 3
07743 Jena
Germany

Sushmita Swaminathan

affiliation not provided to SSRN

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