Impact of Competition from Open Source Software on Proprietary Software

Abstract

The number and impact of open source projects is increasing. We examine the impact of competition from open source software (OSS) on proprietary software providers by analyzing three cases: (i) proprietary software as a monopoly, (ii) mixed duopoly competition between proprietary software provider and OSS, and (i) duopoly competition between two proprietary software providers. We use an analytical model to capture two important features of OSS: (i) its zero licensing price and (ii) its lower usability in comparison with proprietary software. Prior studies have shown that competition from OSS causes the proprietary software provider to produce software that is both lower quality and lower priced than software offered by a monopolist. In contrast, our paper shows that these results hold under certain conditions but are not always true. We find that competition from OSS can induce the proprietary software provider to increase its software quality and price relative to those of the monopolist when the proprietary software provider's cost of enhancing software quality is moderate. Surprisingly, we also find that competition from OSS can lead to a reduction in social welfare. Whereas prior research has shown this result in the context of network effects, we show that this can occur in the absence of network effects and offer a novel explanation.

The impacts of industry environment on software insourcing, outsourcing, and buying

“…Software insourcing refers to the organizational arrangement in which a firm relies on its own IT department to develop software (Dibbern et al, 2004). Generally, software insourcing enables firms to create more IT-based innovations (Qu et al, 2010) because, by building software in house, firms can gradually accumulate their own IT expertise and improve the IT staff's understanding of their business (Qu et al, 2010;Zhou and Choudhary, 2021), both of which contribute to the capability for IT-based innovation (Bharadwaj, 2000). Software outsourcing is a practice in which a firm relies on third-party vendors to develop some or all of its required software (Rajaeian et al, 2017).…”

“…Therefore, firms are urged to enhance their IT-enabled dynamic capability to flexibly and timely respond to environmental change (Lim et al, 2011). Software insourcing enhances firms' IT capabilities because through software insourcing, firms can make timely adjustments to their software when the environment changes (Hung and Low, 2008;Zhou and Choudhary, 2021). Therefore, through software insourcing, they can simultaneously change the function, code, and design of the software in response to market changes.…”

“…, 2010) because, by building software in house, firms can gradually accumulate their own IT expertise and improve the IT staff's understanding of their business (Qu et al. , 2010; Zhou and Choudhary, 2021), both of which contribute to the capability for IT-based innovation (Bharadwaj, 2000). Software outsourcing is a practice in which a firm relies on third-party vendors to develop some or all of its required software (Rajaeian et al.…”

Preventing or Mitigating Adversarial Supply Chain Attacks; a legal analysis

“…Technological development and the mindset of the attacker has however changed drastically since 2013. Miller rightfully does not go into the risks proprietary software or hardware poses, but this still plays a role [52]. Because these tools are not developed by anyone in the supply chain, but can be attacked regardless of who uses it and who developed it, they must be a separate point to include.…”

“…As is the lack of deliberately abstract guidance which, like Denmark, does not exist. Definitions of operators of essential services and what is otherwise needed are here, but one noticeable difference is clear, as fines and investigations are done through either designated authorities 51 or authorized officers 52 . The latter is interesting, but does not mean there will be differences in enforcement, which is found in Reg 34.…”