Premium
Welcome contributor or no price competitor? The competitive interaction of free and priced technologies
Author(s) -
Eckhardt Jonathan T.
Publication year - 2016
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2365
Subject(s) - competition (biology) , industrial organization , emerging technologies , variety (cybernetics) , sample (material) , business , marketing , competitive advantage , emerging markets , economics , computer science , finance , ecology , chemistry , chromatography , artificial intelligence , biology
The existence of free technologies is prevalent in a variety of industries from software to design. This study examines the competitive interaction between free and priced technologies. I draw on the literature on economic logics to predict that, in general, technologies that are freely shared are likely to stimulate interest and provide useful market information without directly competing with priced technologies. In contrast, due to direct competition, I predict that the prevalence of priced technologies will decrease the sales of other priced technologies. I find support for these hypotheses using a sample of more than 1 million transactions in over 200 distinct markets for MobileApps for the P alm computing platform. This study highlights how free technologies can be utilized to enhance performance of commercial producers. Copyright © 2015 John Wiley & Sons, Ltd.