Open Source vs. Proprietary Software: Competition and Compatibility

e use a Hotelling linear city model to study competition between open source and proprietary software, where only the producer of the proprietary software aims at maximizing the profit. The producer of the proprietary software must decide on compatibility. Different compatibility strategies will lead to different network externality, and thus result in different profit for the producer of the proprietary software. We found that the proprietary producer¡¯s choice of compatibility strategy depends on the market coverage conditions. When the market is fully covered, one-way compatibility is the best strategy for the proprietary software. When the market is partly covered, two-way compatibility is the best strategy. Such results are not affected by software quality. Furthermore, when the provider of the open source software pursues the maximum market share rather than reacts passively, two-way compatibility would be the best choice for both the open source and the proprietary software. Moreover, the proprietary software producer does not favor its proprietary rival changing to open source software. Such a change may lower the social welfare.Open Source Software, Proprietary Software, Compatibility, Competition

The Causal Relationship between ICT and FDI

foreign direct investment, information and communication technology, stationarity, cointegration, causality, LSDV, 2SLS

The Causal Relationship between Information and Communication Technology and Foreign Direct Investment

foreign direct investment, FDI, information and communication technology, ICT, stationarity, co-integration, causality

Calculated Based Trust and Social Welfare

Trust building has been acknowledged as one of the critical factor for the success of e-commerce. However, few sources of trust were identified in online transaction. This paper tries to fill the gap by investigating calculative-based trust. Specifically, an infinitely repeated game model is built to illustrate how strangers in online transaction build trust relationship based on the calculation of their own benefits. Furthermore, we relate the strategies of trading parties to social welfare and provide policy implications on how to control the cheating behaviors without jeopardizing social welfare