Font Size: a A A

Competition Between Open Source And Proprietary Software

Posted on:2009-04-24Degree:DoctorType:Dissertation
Country:ChinaCandidate:G F WangFull Text:PDF
GTID:1119360272472437Subject:Industrial Economics
Abstract/Summary:PDF Full Text Request
Since 1990s, Open Source has been an emerging special phenomenon in software industry. The Open Source Software has a great impact on marketing competition arrangement and competition mode of traditional software industry after many years'development. This, on one hand, has challenged the traditional network economics'idea of Winner-take-all, and on the other hand, it has triggered the thoughts of the developing countries on the developing mode and strategies of software industry. Therefore, it contains important theoretical and practical significance to research on the competitive behaviors between Open Source and Proprietary Software as well as their welfare effect. This dissertation mainly has a research on issues, such as the impact of Open Source Software on the market structure of system software, the principal competitive behaviors and economic effect between Open Source and Proprietary Software, and the issue whether government should interfere with the development of Open Source Software by taking the competitive behavior between Open Source and Proprietary Software as the core, comprehensively applying the Industrial Organization Theory, Network Economics Theory, and Two-Market Theory, as well as adopting Game Theory, Comparative Study, and Case Study. The principal contents and conclusions of the research are as follows:(1)The transformation of the system software industry from monopoly market to the competitive market is the realistic basis of the competitive behavior between the Open Source Software and the Proprietary Software, and is also the premise of this dissertation. The dissertation has discussed the developing tendacy of the system software market structure under the circumstance of co-existence of Open Source Software and Proprietary Software from two dimensions--firm supply and consumer demand by comprehensively considering dual factors with respect of network externalities and open source protection. Different market structures will emerge in subdivision system software market due to different characteristics of supply and demand: in the market of server operating system, it is very hard for Proprietary Software firm to prevent the entry of Open Source Software firm. Since the intension of network externalities is relatively weak, Open Source Software firm will take a higher market share, and finally the market balance exists in forms of multi-oligarch or duopoly structure. In the flush bonding market operating system market, the Open Source Software firm may kick Proprietary Software firm out of the market and finally takes the dominant position. It is kind of difficult for the Open Source Software firm to enter into the desktop operating system market. However, if it can expand consuming group it can still enter this market.(2)The character of the competition between Open Source and Proprietary Software differs from character among traditional software competitions and the principal competitive behavior has certain uniqueness as well. On considering the platform competition of two-market, the dissertation constructs the principal behavior framework of the competition between the above mentioned two kinds of software on the basis of discussing the asymmetric competitive structure, such as the market entry sequence, price of product and quality differentiation. This dissertation believes that competitions of market entry, business model and technological innovation are the principal competitive behaviors. Among the above competition, market entry is the basis of other competitive behaviors, the competition of technological innovation is the highest situation of the competition and the competition between two business models is the nature of the competition between Open Source and Proprietary Software.(3)The market entry competition between Open Source and Proprietary Software. Considering the dynamic change of the consumer market, the dissertation constructs a reigning-entering model in analyzing the market entry competition and introduces the horizontal differentiation Hotelling competitive framework. The dissertation concludes as the following: in the market entry of the Open Source Software, the intension of the network externalities, the differentiation of products, the switching cost and the market scale of old customers are important factors. The easier for the Open Source Software firm to enter into the market if the intension of the network externalities is weak enough, or the differentiation of products is large, the switching cost and the market scale of old users are small. All of the above demonstrate that there will not always appear the monopolistic market arrangement in the market where the network externalities is strong, which expands and supplement the existing pertinent network economic theories.(4)The business model competition between Open Source and Proprietary Software. In accordance with the two-market characteristic of system software, the dissertation makes an expansion of the model of Economides and Katsamakas (2005), that is introducing the cross network externalities factor of consumer demand and application software firm into the business competitive model. With one premise that a proprietary application software firm provides support for system software, the dissertation educes the following conclusions by using Game Theory analysis:①in the respect of price, the price of proprietary software in the duopoly market is lower than that when it monopolized. Moreover, Proprietary Software will widen its depreciation as the market share expansion of Open Source Software.②in the respect of the quantity of product selling, the selling quantity of proprietary software mainly lies on consumers'preference degree of Proprietary Software and Open Source Software; the demand for Open Source Software is mainly affected by cross network externalities and service supporting expense. The weaker the intension of cross network externalities and the lower the service supporting expense are, the larger the demand is.③in the respect of manufacture's profit, the manufacturer's profit margin of Proprietary Software will be lower due to market competition when there is a larger demand of system software and proprietary software.④in the respect of consumer surplus, the consumer surplus of proprietary software purchasers in the duopoly market is larger than that in the monopolizing market; for open source software, whose consumer surplus is relevant to its potential market and service expense, its consumer surplus will increase when expend the potential market and decrease the service expense.(5)The competition of technological innovation between open source and proprietary software. When the social total technology level is certain, the dissertation expands the static model of the Bitzer and Schroder(2003)to the dynamic Game Theory model, probes into the issue of choosing technological level in the innovative competition of software products, and then compares the technology equilibrium within monopoly and duopoly markets. Conclusions are as following:①in the duopoly market, if open source and Proprietary Software have the same researching cost, these two kinds of software will have the same technological level when market reaches equilibrium, and this technological level will be improved as the decrease of the researching cost, the enhancement of software's substitute and the increase of unit software income; However, when researching cost is not same, open source software who has the lower researching cost has a higher technological level.②When society total technological level is certain, the technological level of both open source and proprietary software firms in the duopoly market is higher than that when proprietary software monopolizing the market.(6)Government's interference in the development of open source software. From the angle that public good theory and network industry incomer later who has the inferior position in the market, the dissertation dissertate the issue of market failure in the development of open source software. Open source software has some pick-up behaviors in supplying due to its characteristic of public good, which can not make a price and sell as other private goods. In addition, in the network industry, the firm who entered the market earlier will take a larger market share, and prevent those entered later from developing using its controlling ability of the market. Whereas open source software has the significance of enhancing the competition of software industry, raising consumer's welfare, and propelling industrial technology progress, government should interfere in the development of open source software appropriately in order to provide a good developing environment for it.(7)Regarding issues such as unreasonable product structure of China software industry, lower technological innovation ability, lack of core products with proprietary intellectually property rights, the dissertation probes into the great significance of China propelling the development of Open Source Software, besides, on the realistic basis of developing open source software for China, the dissertation puts forth that China government should grasp the developing opportunity of open source software, focusing on two aspects—reducing the switching cost of open source software and inspiring developers to participate, as well as taking policies and measures, such as loosening the protection of intellectually property rights for software industry, staggered purchase by government, then establish Open Source community, improving Open Source training, and constituting pertinent laws and regulations, in order to propel the development of Open Source Software.
Keywords/Search Tags:Open Source Software, Proprietary Software, Market Entry, Business Model, Technological Innovation
PDF Full Text Request
Related items