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on Technology and Industrial Dynamics |
| By: | German Lambardi (Toulouse School of Economics) |
| Abstract: | In this paper I study how innovation investment in a software duopoly is affected by the fact that one of the firms is, or might become Open Source. Firms can either be proprietary source (PS) or open source (OS) and have different initial technological levels. An OS firm is a for profit organization whose basic software is OS and it is distributed for free. The OS firm, however, is able to make profits from selling complementary software and, on the cost side, it receives development help from a community of users. I first compare a duopoly composed by two PS firms with a mixed duopoly of a PS and OS firm and I find that a PS duopoly might generate more innovation than a mixed duopoly if the initial technological gap between firms is small. However if this gap is large, a PS duopoly generates less innovation than a mixed duopoly. I then extend the setting to allow PS firms to switch to OS or to remain PS. A PS firm wants to become OS if it gets behind enough in the technological race against a competitor. I find that the outside option to become OS might soften competition on innovation since the technological leader prefers to reduce his innovation investment to avoid the OS switch of the follower. Therefore, although the switch to OS could generate higher investment levels ex-post it might generate lower investment ex-ante. In this context I find that a government subsidy to OS firms could be potentially harmful for innovation. |
| Keywords: | Software Market, Open Source, Innovation Incentives |
| JEL: | L13 L17 O31 O38 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0915&r=tid |
| By: | Manuela Gussoni - Andrea Mangani |
| Abstract: | This paper provides a theoretical and empirical framework to explore how public funding affects firms' R&D investments depending on their engagement in horizontal R&D cooperations and different levels of ap- propriability conditions within the economy. It assumes firms' Cournot-Nash behavior in the choice of the optimal R&D investment level and provides empirical evidence in support of the theoretical ¯ndings using data on Spain and Germany from the Third Community Innovation Survey. Theoretical and empirical re- sults suggest that firms' cooperative behaviour and the appropriability conditions affect the relationship between public funding for innova- tion and R&D investments. |
| Keywords: | R&D cooperatives; subsidies;knowledge spillovers; innovation. |
| JEL: | O32 H20 L10 D43 D78 |
| Date: | 2009–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2009/90&r=tid |
| By: | Tobias Kretschmer (Institute for Communication Economics, LMU Munich); Eugenio Miravete (Department of Economics, University of Texas at Austin); José Pernías (Department of Economics, Universidad Jaume I de Castellón) |
| Abstract: | Liberalization of the European automobile distribution system in 2002 limits the ability of manufacturers to impose vertical restraints, leading to a substantial restructuring of the industry and increasing the competitive pressure among dealers. We estimate an equilibrium model of profit maximization to evaluate how dealers change their innovation strategies with this regime change. Using French data we evaluate the existence of complementarities among adoptions of innovations and the scale of production. We conclude that as firms expand their scale of production they concentrate their effort in one type of innovation only. Results are robust to the existence of unobserved heterogeneity. |
| Keywords: | Competitive Pressure, Complementarity, Product and Process Innovation |
| JEL: | C35 L86 O31 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0922&r=tid |