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The R&D risk for proprietary software producer when open source software appears

Authors
Publisher
Elsevier Ltd
Publication Date
Volume
15
Identifiers
DOI: 10.1016/j.proeng.2011.08.256
Keywords
  • Risk
  • R&D
  • Open Source Software
  • Proprietary Software
  • Network Externality

Abstract

Abstract By extending Cournot model, this paper investigates how the appearance of open source software (OSS) affects the R&D risk in a market initially monopolized by proprietary software (PS) producer. The software market exhibits network externality. It is found that (i) the R&D risk level of PS producer in the market monopolized by PS isn’t higher than in this market emerging OSS; (ii) there exist some R&D cost functions making R&D risk level be lower when PS producer monopolizes the market than when it competes with an OSS producer.

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