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Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows

Author

Listed:
  • Ramon Casadesus-Masanell

    (Harvard Business School, Boston, Massachusetts 02163 and Instituto de Estudios Superiores de Empresa, Avenue Pearson 21, Barcelona 08034, Spain)

  • Pankaj Ghemawat

    (Harvard Business School, Boston, Massachusetts 02163 and Instituto de Estudios Superiores de Empresa, Avenue Pearson 21, Barcelona 08034, Spain)

Abstract

This paper analyzes a dynamic mixed duopoly in which a profit-maximizing competitor interacts with a competitor that prices at zero (or marginal cost), with the cumulation of output affecting their relative positions over time. The modeling effort is motivated by interactions between Linux, an open source operating system, and Microsoft's Windows and consequently emphasizes demand-side learning effects that generate dynamic scale economies (or network externalities). Analytical characterizations of the equilibrium under such conditions are offered, and some comparative static and welfare effects are examined.

Suggested Citation

  • Ramon Casadesus-Masanell & Pankaj Ghemawat, 2006. "Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows," Management Science, INFORMS, vol. 52(7), pages 1072-1084, July.
    • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:7:p:1072-1084
    DOI: 10.1287/mnsc.1060.0548
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    References listed on IDEAS

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