Concurrentie, innovatie en intellectuele eigendomsrechten in software markten

This study analyzes under which circumstances it may be desirable for the government to stimulate open source software as a response to market failures in software markets. To consider whether policy intervention can increase dynamic efficiency, we discuss the differences between proprietary software and open source software with respect to the incentives to innovate and market failures that may occur. The document proposes guidelines to determine which types of policy intervention may be suitable. Our most important finding is that directly stimulating open source software, e.g. by acting as a lead customer, can improve dynamic efficiency if (i) there is a serious customer lock-in problem, while (ii) to develop the software, there is no need to purchase specific, complementary inputs at a substantial cost, and (iii) follow-on innovations are socially valuable but there are impediments to contractual agreements between developers that aim at realizing such innovations. This publication is in Dutch.

Open Source Innovation, Patent Injunctions, and the Public Interest

This Article explores the difficulties that high technology markets pose for patent law and, in particular, for patent injunctions. It then outlines the ways in which “open source innovation” is unusually vulnerable to patent injunctions. It argues that courts can recognize this vulnerability, and respond to the particular competitive and innovative benefits of open source innovation, by flexibly applying the Supreme Court’s ruling in eBay v. MercExchange. Having dealt with the lamentable failure of the International Trade Commission to exercise a similar flexibility in its own patent jurisprudence, despite statutory and constitutional provisions that counsel otherwise, the Article concludes with some recommendations for reform

You Won the Battle. What about the War? A Model of Competition between Proprietary and Open Source Software

Although open source software has recently attracted a relevant body of economic literature, a formal treatment of the process of com- petition with its proprietary counterpart is still missing. Starting from an epidemic model of innovation di?usion, we try to ?ll this gap. We propose a model where the two competing technologies depend on dif- ferent factors, each one speci?c to its own mode of production (prof- its and developers’ motivations respectively), together with network e?ects and switching costs. As the speed of di?usion of these tech- nologies is crucial for the ?nal outcome, we endogenize the parame- ter in?uencing it across the population of adopters. We ?nd that an asymptotically stable equilibrium where both technologies coexist can always be present and, when the propagation coe?cient is endogenous, it coexists with winner–take–all solutions. Furthermore, an increase in the level of the switching costs for one technology increases the num- ber of its adopters, while reducing the number of the other one. If the negative network e?ects increase for one of the two technologies, then the equilibrium level of users of that technology decrease.Increasing returns; Open-source software; Technological competition; Technology di?usion

Competition, Innovation and Intellectual Property Rights in Software Markets

This paper analyzes when it may be desirable for the government to stimulate open source software as a response to market failures in software markets. Our most important finding is that directly stimulating open source software, e.g. by acting as a lead customer, can improve dynamic efficiency if (i) there is a serious customer lock-in problem, while (ii) to develop the software, there is no need to purchase specific, complementary inputs at a substantial cost, and (iii) follow-on innovations are socially valuable but there are impediments to contractual agreements between developers that aim at realizing such innovations.software markets, intellectual property rights, open source software, public policy.

Product innovation when consumers have switching costs

Economists have long recognized that in free markets, incentives to innovate will be diluted unless some factors grant innovators with a temporary monopoly. Patenting is the most cited factor in the economic literature. This survey concentrates on another factor that confers innovators with first-mover advantage over their competitors, namely consumer switching costs, whereby a consumer makes an investment specific to her current seller, that must be duplicated for any new seller. In this survey, we list several components of switching costs that are relevant as regards to firm innovation behaviour. The aim of this classification is twofold. First, consumer switching cost theory has matured to the point that some classification of switching costs for both understanding innovative firm behaviour and building policy-oriented models is necessary. Second, the classification included in this paper addresses the confusion that has been existing so far regarding the distinction between ‘good’ or ‘bad’ switching costs, perceived or paid switching costs, and between switching and search costs. This paper then surveys the existing literature on the effect of switching costs on product innovation by firms and the way they compete for consumers. We also raise several important regulation and competition policy questions, using examples from the real world.Consumer switching costs; Search costs; Product innovation; Competition policy; Economic methodology

Network strategies for the new economy

In this paper we argue that the pace and scale of development in the information and communication technology industries (ICT) has had and continues to have major effects on the industry economics and competitive dynamics generally. We maintain that the size of changes in demand and supply conditions is forcing companies to make significant changes in the way they conceive and implement their strategies. We decompose the ICT industries into four levels, technology standards, supply chains, physical platforms, and consumer networks. The nature of these technologies and their cost characteristics coupled with higher degrees of knowledge specialisation is impelling companies to radical revisions of their attitudes towards cooperation and co-evolution with suppliers and customers. Where interdependencies between customers are particularly strong, we anticipate the possibility of winner-takes-all strategies. In these circumstances industry risks become very high and there will be significant consequences for competitive markets

The evolution of markets under entry and standards regulation - the case of global mobile telecommunication.

We analyze the effects of government policies on the evolution of an industry, the global mobile telecommunications market. We find a relatively slow diffusion convergence between countries. This follows partly from regulatory delay in issuing first licenses, yet persisting initial cross-country differences also contribute to a lack of convergence. Introducing competition has a strong immediate impact on diffusion, but a weak impact afterwards; sequential entry is preceded by pre-emptive behavior by incumbents. This is consistent with the presence of consumer switching costs. Setting a single technological standard accelerates the diffusion of analogue technologies considerably; for digital technologies it is too early to draw reliable conclusions, yet the available evidence suggests that setting single standards has similar beneficial effects.Competition; Costs; Effects; Industry; Convergence;

Internet economics and policy: An Australian perspective

Publicly available information indicates that the demand and supply of Internet and Internet-related services are continuing to expand at a rapid pace. Since 1997 the number of Internet service providers (facilities-based and resellers) has increased by nearly 40 per cent; the number of points-of-presence per Internet service provider has increased by five times; the number of hosts connected to the Internet has more than quadrupled; and Internet traffic has increased from six to 10 times. The emergence of electronic commerce (e-commerce), driven by this rapid adoption of Internet services and continual technological innovation, is likely to have profound economic and social impacts on Australian society. This paper provides a detailed analysis of the impact of the Internet and e-commerce, ranging from the changes in the market structure of the telecommunications industry, its role in changing the organisation of traditional markets, the emergence of new markets, and the structural shifts to employment, productivity and trade. The paper also analyses contemporary Australian regulatory responses. IIe-commerce; internet economics