Coexistence and Market Tipping in a Diffusion Model of Open Source vs. Proprietary Software
28 Pages Posted: 5 Jun 2008 Last revised: 31 Jul 2012
Date Written: November 5, 2010
A large number of studies has been canvassed by the growing rates of diffusion of Open Source Software. However, a formal analysis of the process of competition between open–source and proprietary software is still missing. We propose an epidemic model of innovation diffusion to deal with the different factors (proﬁts for proprietary software and developers’ motivations for open–source software) upon which such a process of competition ultimately depends. Moreover, we add network effects and switching costs, together with the endogenisation of the parameters of the speed of dffusion inﬂuencing the ﬁnal outcome. We show the conditions for an asymptotically stable equilibrium to exist, where both softwares coexist. When the propagation coefficient is endogenous, winner–take–all solutions are also likely.
Keywords: Increasing returns, Model of diffusion, Open-source software, Technological competition
JEL Classification: L17, L86, O33
Suggested Citation: Suggested Citation