The Impact of Network Externalities on the Competition Between Open Source and Proprietary Software

In this paper, we build analytical models to examine the impact of network externalities on the competition between open source software (OSS) and proprietary software. We investigate the competing OSS and proprietary software products with comparable functionalities in four different scenarios depe...

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Vydáno v:Journal of management information systems Ročník 27; číslo 4; s. 201 - 230
Hlavní autoři: Cheng, Hsing Kenneth, Liu, Yipeng, Tang, Qian (Candy)
Médium: Journal Article
Jazyk:angličtina
Vydáno: Abingdon Routledge 01.04.2011
M. E. Sharpe
Sharpe
Taylor & Francis Ltd
Témata:
Compatibility
Competition
Computer software
Consumers
Copyright
Economic competition
Externalities
Externality
Financial incentives
Imbalance
Information storage and retrieval systems
Market share
Markets
Modelling
Network access lines
Network analysis
Network effects
network externalities
Networks
Netzwerkökonomik
Open competition
Open Source
Open source software
Prices
Product development
Property
Proprietary
Rivalry
Software
software compatibility
Studies
Unternehmenssoftware
Vendors
Vergleich
ISSN:0742-1222, 1557-928X
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Abstract In this paper, we build analytical models to examine the impact of network externalities on the competition between open source software (OSS) and proprietary software. We investigate the competing OSS and proprietary software products with comparable functionalities in four different scenarios depending on whether they are compatible with each other and whether the underlying market is fully covered (i.e., all consumers adopt one of the two products). Furthermore, we study which party has the most incentive to make its product compatible with its counterpart. When the market is fully covered, the installed base and the profit of proprietary software increase at the expense of a decreasing user base for OSS in the presence of network externalities. This competitive imbalance becomes more pronounced when OSS and proprietary software are incompatible and the market is partially covered. Finally, we find that in the presence of network externalities, being compatible with its rival is not desirable for the proprietary software, but highly beneficial to the OSS community.
AbstractList In this paper, we build analytical models to examine the impact of network externalities on the competition between open source software (OSS) and proprietary software. We investigate the competing OSS and proprietary software products with comparable functionalities in four different scenarios depending on whether they are compatible with each other and whether the underlying market is fully covered (i.e., all consumers adopt one of the two products). Furthermore, we study which party has the most incentive to make its product compatible with its counterpart. When the market is fully covered, the installed base and the profit of proprietary software increase at the expense of a decreasing user base for OSS in the presence of network externalities. This competitive imbalance becomes more pronounced when OSS and proprietary software are incompatible and the market is partially covered. Finally, we find that in the presence of network externalities, being compatible with its rival is not desirable for the proprietary software, but highly beneficial to the OSS community.
In this paper, we build analytical models to examine the impact of network externalities on the competition between open source software (OSS) and proprietary software. We investigate the competing OSS and proprietary software products with comparable functionalities in four different scenarios depending on whether they are compatible with each other and whether the underlying market is fully covered (i.e., all consumers adopt one of the two products). Furthermore, we study which party has the most incentive to make its product compatible with its counterpart. When the market is fully covered, the installed base and the profit of proprietary software increase at the expense of a decreasing user base for OSS in the presence of network externalities. This competitive imbalance becomes more pronounced when OSS and proprietary software are incompatible and the market is partially covered. Finally, we find that in the presence of network externalities, being compatible with its rival is not desirable for the proprietary software, but highly beneficial to the OSS community. [PUBLICATION ABSTRACT]
Author Cheng, Hsing Kenneth
Tang, Qian (Candy)
Liu, Yipeng
Author_xml – sequence: 1
  givenname: Hsing Kenneth
  surname: Cheng
  fullname: Cheng, Hsing Kenneth
  organization: American Economics Institutions Faculty Fellow, Department of Information Systems and Operations Management of Warrington College of Business Administration, University of Florida
– sequence: 2
  givenname: Yipeng
  surname: Liu
  fullname: Liu, Yipeng
  organization: Department of Operations and Information Management, Kania School of Management, University of Scranton
– sequence: 3
  givenname: Qian (Candy)
  surname: Tang
  fullname: Tang, Qian (Candy)
  organization: Department of Information Systems, School of Computing, National University of Singapore
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2011 M.E. Sharpe, Inc.
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Snippet In this paper, we build analytical models to examine the impact of network externalities on the competition between open source software (OSS) and proprietary...
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SubjectTerms Compatibility
Competition
Computer software
Consumers
Copyright
Economic competition
Externalities
Externality
Financial incentives
Imbalance
Information storage and retrieval systems
Market share
Markets
Modelling
Network access lines
Network analysis
Network effects
network externalities
Networks
Netzwerkökonomik
Open competition
Open Source
Open source software
Prices
Product development
Property
Proprietary
Rivalry
Software
software compatibility
Studies
Unternehmenssoftware
Vendors
Vergleich
Title The Impact of Network Externalities on the Competition Between Open Source and Proprietary Software
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