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http://hdl.handle.net/2451/29504
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| Title: | Mixed Source |
| Authors: | Casadesus-Masanell, Ramon - Harvard Business School
Llanes, Gaston - Harvard Business School |
| Keywords: | Open Source, User Innovation, Business Models, Complementarity, Vertical
Dierentiation, Value Creation, Value Capture |
| Issue Date: | 2009 |
| Series/Report no.: | Net Institute Working Paper;09-06 |
| Abstract: | We study competitive interaction between profit-maximizing firms that
sell software and complementary goods or services. In addition to
tactical price competition, we allow firms to compete through business
model reconfigurations. We consider three business models: the
proprietary model (where all software modules offered by the firm are
proprietary), the open source model (where all modules are open source),
and the mixed source model (where a few modules are open). When a firm
opens one of its modules, users can access and improve the source code.
At the same time, however, opening a module sets up an open source
(free) competitor. This hampers the firm's ability to capture value. We
analyze three competitive situations: monopoly, commercial firm vs.
non-profit open source project, and duopoly. We show that: (i ) firms
may become 'more closed' in response to competition from an outside open
source project; (ii ) firms are more likely to open substitute, rather
than complementary, modules to existing open source projects; (iii) when
the products of two competing firms are similar in quality, firms
differentiate through choosing different business models; and (iv )
low-quality firms are generally more prone to opening some of their
technologies than rms with high-quality products. |
| URI: | http://hdl.handle.net/2451/29504 |
| Appears in Collections: | NET Institute Working Papers Series
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