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Dynamic mixed duopoly: A model motivated by Linux vs. Windows

Author

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  • Casadesus-Masanell, Ramon

    (IESE Business School)

  • Ghemawat, Pankaj

    (Harvard Business School)

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 in the computer server segment, 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

  • Casadesus-Masanell, Ramon & Ghemawat, Pankaj, 2003. "Dynamic mixed duopoly: A model motivated by Linux vs. Windows," IESE Research Papers D/519, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0519
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    File URL: http://www.iese.edu/research/pdfs/DI-0519-E.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Stephane Verani, 2006. "Open Source Development in a Differentiated Duopoly," Economics Discussion / Working Papers 06-05, The University of Western Australia, Department of Economics.
    2. Bitzer, Jurgen, 2004. "Commercial versus open source software: the role of product heterogeneity in competition," Economic Systems, Elsevier, vol. 28(4), pages 369-381, December.
    3. Nicholas Economides & Evangelos Katsamakas, 2005. "Linux vs. Windows: A Comparison of Innovation Incentives and a Case Study," Working Papers 05-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    4. Thomas Le Texier & Mourad Zeroukhi, 2015. "How Can Proprietary Software Firms Take Advantage Over Open Source Communities? Another Story of Pro?fitable Piracy," Economics Working Paper Archive (University of Rennes & University of Caen) 201503, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    5. Josh Lerner & Jean Tirole, 2005. "The Economics of Technology Sharing: Open Source and Beyond," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 99-120, Spring.
    6. Fabrizio Cesaroni & Paola Giuri, 2006. "Intellectual Property Rights and Market Dynamics," Chapters, in: Patrizio Bianchi & Sandrine Labory (ed.), International Handbook on Industrial Policy, chapter 11, Edward Elgar Publishing.
    7. Zhaoli Meng, 2005. "Open Source vs. Proprietary Software: Competition and Compatibility," Industrial Organization 0508008, University Library of Munich, Germany.
    8. Evangelos Katsamakas & Mingdi Xin, 2005. "An economic analysis of enterprise adoption of open source software," Working Papers 05-29, NET Institute, revised Oct 2005.
    9. Alexandre Gaudeul, 2004. "Competition between open-source and proprietary software: the (La)TeX case study," Industrial Organization 0409007, University Library of Munich, Germany.
    10. Nicholas Economides & Evangelos Katsamakas, 2005. "Linux vs. Windows: A comparison of application and platform innovation incentives for open source and proprietary software platforms," Working Papers 05-07, NET Institute.
    11. Zhaoli Meng & Sang-Yong Tom Lee, 2005. "Open Source vs. Proprietary Software: Competition and Compatibility," Industrial Organization 0508009, University Library of Munich, Germany.

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    Keywords

    open-source software; network effects; microsoft; linux; competitive dynamics; strategy;
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