October 24, 2002

Open vs. closed; some consequences of the open source movement for software markets.

Open sourdce movement has received more and more attention in the recent years. However, there are not many studies which analyse its economic impact in sortware markets. This paper gives a description of the open source phenomenon and attempts to analyse its impact on competition.

The focus is on consequenses for entry. The comparison of open source projects with proprietary firms turns out to be difficult because of a different nature of incentives which motivate both types of developers. It is therefore difficult to describe the general impact op open source. Nonetheless, one can try to classify open source programs according to their expected effects. The analysis is illustrated with examples, with a particular emphasis on the competition between Microsoft Windows and GNU/Linus operatin system.

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