The impact of commercial open source software on proprietary software producers and social welfare
Abstract: A growing number of
commercial open source software, based on free open source software, appears in
many segments of software market. The purpose of this study is to investigate
how commercial open source software affects proprietary software producer’s
pricing (market share or profit), consumer surplus and social welfare.
Design/methodology: To analyze the impact of commercial open source
software on proprietary software producer, this study constructs two
vertical-differentiation models: the basic model considers proprietary software
only competing with free open source software, and its extended one considers
proprietary software competing with both free and commercial open source
software.
Findings: This study mainly finds that the presence of commercial open
source software leads to the software price and profit for proprietary software
producer decrease and the consumer surplus and social welfare increase.
However, it does not necessarily cause the decline in the market share for
proprietary software producer.
Originality/value: The main contribution of this study is to examine the
effect of commercial open source software on proprietary software producer’s
competitive strategy, consumer surplus and social welfare.
Keywords: competition; open
source software; commercial open source software; proprietary software;
software usability
Author: Mingqing Xing
Journal Code: jptindustrigg140094
