COEXISTENCE OF PRIVATE FIRMS AND OPEN SOURCE FIRMS UNDER SPILLOVERS AND CONSUMER BIAS

Open source technologies have been an important divergence from the private produc- tion, and some markets have accommodated both open source firms and private firms. We explore the conditions under which such a coexistence of both type of firms can be seen. Through a simple and tractable game theoretical model, with spillovers on the open source production and positive consumer bias for the privately produced good, we analyze the conditions for which, in the equilibrium, a private firm and an open source firm share the market. We find that for large enough consumer bias, the two types cannot coexist, however when the consumer bias is relatively low and the spillover effect is not too strong, then we get a coexistence result.