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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Economic Effects of Government's Supports for Open Source Software

Vol.16, No.3, September , 51–76


English Version |  Korean Version
  •   (Chung-Ang University)

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Abstract  

This paper examines the economic effects of direct or indirect governmental supports for open source software. To Schmidt and Schnitzer (2002), we incorporate the network effects, which are crucial features of software markets. We consider two kinds of governmental supports for open source software. The first one is to force or encourage some government's agencies or schools to adopt the open source software, while the second one is to subsidize the open source software users. How the first policy affects the consumers' surplus depends on the size of the network effects in the market. If the network effects are sufficiently large, the consumer surplus will be increased. Otherwise, the consumers as a whole will be worse off. On the other hand, the second policy will increase the welfare of all the consumers. However, both policies will reduce the social welfare that takes the firm's profits into account. The last result heavily depends on the specific assumption of the model.


Keywords
   Open Source Software, Proprietary Software, Network Effects, Consumer Lock-in

JEL classification codes
   D4, L1
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