Difference between revisions of "Mustonen (2005)"
From Copyright EVIDENCE
m (Saved using "Save and continue" button in form) |
|||
| (10 intermediate revisions by one other user not shown) | |||
| Line 6: | Line 6: | ||
|Year=2005 | |Year=2005 | ||
|Full Citation=Mustonen, Mikko. When does a firm support substitute open source programming?. Journal of Economics & Management Strategy 14.1 (2005): 121-139. | |Full Citation=Mustonen, Mikko. When does a firm support substitute open source programming?. Journal of Economics & Management Strategy 14.1 (2005): 121-139. | ||
| − | |Abstract=Software firms are observed to support programmers’ communities, which | + | |Abstract=Software firms are observed to support programmers’ communities, which develop rival open source programs. A firm selling a copyright program has an incentive to support substitute copyleft programming when support creates compatibility between the programs and programs exhibit network effects. Costly compatibility benefits the firm as its consumers gain access to the community’s services but may also hurt the firm because it cannot profit from the valuation difference between incompatible networks. The incentive arises under a weak network effect even when the consumers’ benefit is small. Standardization and enlarging the open source programmers’ community do not always increase welfare. |
| − | develop rival open source programs. A firm selling a copyright program has an | ||
| − | incentive to support substitute copyleft programming when support creates | ||
| − | compatibility between the programs and programs exhibit network effects. | ||
| − | Costly compatibility benefits the firm as its consumers gain access to the | ||
| − | community’s services but may also hurt the firm because it cannot profit | ||
| − | from the valuation difference between incompatible networks. The incentive | ||
| − | arises under a weak network effect even when the consumers’ benefit is small. | ||
| − | Standardization and enlarging the open source programmers’ community do | ||
| − | not always increase welfare. | ||
|Authentic Link=http://onlinelibrary.wiley.com/doi/10.1111/j.1430-9134.2005.00036.x/abstract | |Authentic Link=http://onlinelibrary.wiley.com/doi/10.1111/j.1430-9134.2005.00036.x/abstract | ||
| + | |Link=http://onlinelibrary.wiley.com/doi/10.1111/j.1430-9134.2005.00036.x/abstract | ||
|Reference=Lerner and Tirole (2002); Landes and Posner (1989); Katz and Shapiro (1985); Banerjee (2003); Yoon (2001); | |Reference=Lerner and Tirole (2002); Landes and Posner (1989); Katz and Shapiro (1985); Banerjee (2003); Yoon (2001); | ||
| − | |Plain Text Proposition=Firms seem willing to expend substantial resources to support a copyleft | + | |Plain Text Proposition=Firms seem willing to expend substantial resources to support a copyleft community even if the copyleft program will compete with the firm’s program. Support of copyleft development facilitates compatibility |
| − | community even if the copyleft program will compete with the firm’s | + | between the programs. Consumers’ willingness to pay for the firm’s program is increased with the introduction of a common network and a benefit from the user innovation of the copyleft programmers’ community. On the other hand, support is costly. More importantly, if the cost is low, compatibility removes the advantage in network |
| − | program. Support of copyleft development facilitates compatibility | + | valuations that the firm enjoys under incompatibility. We determined the conditions for the firm to prefer support and thus compatibility instead of targeting to incompatibility. The welfare analysis showed |
| − | between the programs. Consumers’ willingness to pay for the firm’s | + | that standardization or society’s support of copyleft development might have adverse welfare implications in contrast to received views. |
| − | program is increased with the introduction of a common network | ||
| − | and a benefit from the user innovation of the copyleft programmers’ | ||
| − | community. On the other hand, support is costly. More importantly, | ||
| − | if the cost is low, compatibility removes the advantage in network | ||
| − | valuations that the firm enjoys under incompatibility. We determined | ||
| − | the conditions for the firm to prefer support and thus compatibility | ||
| − | instead of targeting to incompatibility. The welfare analysis showed | ||
| − | that standardization or society’s support of copyleft development might | ||
| − | have adverse welfare implications in contrast to received views. | ||
|FundamentalIssue=1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare, 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption), 3. Harmony of interest assumption between authors and publishers (creators and producers/investors), | |FundamentalIssue=1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare, 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption), 3. Harmony of interest assumption between authors and publishers (creators and producers/investors), | ||
|EvidenceBasedPolicy=D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability), A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right), | |EvidenceBasedPolicy=D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability), A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right), | ||
| − | |Discipline= | + | |Discipline=L13: Oligopoly and Other Imperfect Markets, L15: Information and Product Quality • Standardization and Compatibility, L86: Information and Internet Services • Computer Software, O32: Management of Technological Innovation and R&D, O34: Intellectual Property and Intellectual Capital |
|Intervention-Response=* Open source communities, such as the Copyleft movement, may create goods that have a large enough 'network effect' to make it beneficial for the firm to use or acquire open source products | |Intervention-Response=* Open source communities, such as the Copyleft movement, may create goods that have a large enough 'network effect' to make it beneficial for the firm to use or acquire open source products | ||
* This leads to a break in the monopoly hold of a firm and increases social welfare | * This leads to a break in the monopoly hold of a firm and increases social welfare | ||
* The level of increase in social welfare, or whether it exists at all, depends on the amount of benefit to the open source community | * The level of increase in social welfare, or whether it exists at all, depends on the amount of benefit to the open source community | ||
* Piracy can increase the network effect of a good and benefit the firm producing the legitimate good | * Piracy can increase the network effect of a good and benefit the firm producing the legitimate good | ||
| − | |Description of Data= | + | |Description of Data=This study uses previous studies from 1996 to 2005 to compare two different models of software development: one of open collaboration and one of closed development and examine the incentives for each. The authors then analyse the contribution of each to social welfare. |
| − | |Data Year=1996 | + | |Data Year=1996-2005 |
|Data Type=Secondary data | |Data Type=Secondary data | ||
|Data Source=Business Software Alliance; | |Data Source=Business Software Alliance; | ||
| Line 45: | Line 28: | ||
|Method of Analysis=Quantitative Analysis Methods, Quantitative content analysis (e.g. text or data mining) | |Method of Analysis=Quantitative Analysis Methods, Quantitative content analysis (e.g. text or data mining) | ||
|Industry=Software publishing (including video games); Computer programming; | |Industry=Software publishing (including video games); Computer programming; | ||
| − | |Country=Finland; | + | |Country=Finland; European Union; United States; |
| − | |Cross-country= | + | |Cross-country=Yes |
| − | |Comparative= | + | |Comparative=Yes |
|Government or policy=No | |Government or policy=No | ||
|Literature review=Yes | |Literature review=Yes | ||
| + | |Funded By=The Finnish Academy; | ||
}} | }} | ||
|Dataset={{Dataset | |Dataset={{Dataset | ||
| − | |Sample Size= | + | |Sample Size=2 |
| − | |Level of Aggregation= | + | |Level of Aggregation=Open and closed development models, |
| − | |Data Material Year=1986 | + | |Data Material Year=1986-2005 |
}} | }} | ||
}} | }} | ||
Revision as of 08:45, 7 October 2016
Contents
Source Details
| Mustonen (2005) | |
| Title: | When Does a Firm Support Substitute Open Source Programming? |
| Author(s): | Mikko Mustonen |
| Year: | 2005 |
| Citation: | Mustonen, Mikko. When does a firm support substitute open source programming?. Journal of Economics & Management Strategy 14.1 (2005): 121-139. |
| Link(s): | Definitive , Open Access |
| Key Related Studies: | |
| Discipline: | |
| Linked by: | |
| About the Data | |
| Data Description: | This study uses previous studies from 1996 to 2005 to compare two different models of software development: one of open collaboration and one of closed development and examine the incentives for each. The authors then analyse the contribution of each to social welfare. |
| Data Type: | Secondary data |
| Secondary Data Sources: | |
| Data Collection Methods: | |
| Data Analysis Methods: | |
| Industry(ies): | |
| Country(ies): | |
| Cross Country Study?: | Yes |
| Comparative Study?: | Yes |
| Literature review?: | Yes |
| Government or policy study?: | No |
| Time Period(s) of Collection: |
|
| Funder(s): |
|
Abstract
Software firms are observed to support programmers’ communities, which develop rival open source programs. A firm selling a copyright program has an incentive to support substitute copyleft programming when support creates compatibility between the programs and programs exhibit network effects. Costly compatibility benefits the firm as its consumers gain access to the community’s services but may also hurt the firm because it cannot profit from the valuation difference between incompatible networks. The incentive arises under a weak network effect even when the consumers’ benefit is small. Standardization and enlarging the open source programmers’ community do not always increase welfare.
Main Results of the Study
Firms seem willing to expend substantial resources to support a copyleft community even if the copyleft program will compete with the firm’s program. Support of copyleft development facilitates compatibility between the programs. Consumers’ willingness to pay for the firm’s program is increased with the introduction of a common network and a benefit from the user innovation of the copyleft programmers’ community. On the other hand, support is costly. More importantly, if the cost is low, compatibility removes the advantage in network valuations that the firm enjoys under incompatibility. We determined the conditions for the firm to prefer support and thus compatibility instead of targeting to incompatibility. The welfare analysis showed that standardization or society’s support of copyleft development might have adverse welfare implications in contrast to received views.
Policy Implications as Stated By Author
- Open source communities, such as the Copyleft movement, may create goods that have a large enough 'network effect' to make it beneficial for the firm to use or acquire open source products
- This leads to a break in the monopoly hold of a firm and increases social welfare
- The level of increase in social welfare, or whether it exists at all, depends on the amount of benefit to the open source community
- Piracy can increase the network effect of a good and benefit the firm producing the legitimate good
Coverage of Study
Datasets
| Sample size: | 2 |
| Level of aggregation: | Open and closed development models |
| Period of material under study: | 1986-2005 |
