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

Platform Market Share of Korean Online Game under Two-Sided Market with Low Switching Costs

Online game is one of the fastest growing industries in Korea. It accounts for 5.8% of the world game market and one third of the world online game market. Korea’s online game market has two-sided market characteristic with very low switching costs. This paper is to study the various characteristics of two-sided market under low switching costs. We empirically investigate network externalities by using various variables in online game industry in Korea. We found the number of games available in a platform increased its market share, while the diversity of games and generality of games had no significant impacts. We also found that multi-homing increases an online platform’s market share when it is relatively new, but decreases market share when it becomes mature

The impact of IT vendor to firm’s IT outsourcing

This study seeks to better understand the impact of IT vendor to firm’s IT outsourcing in Korea. Using the event study methodology, we empirically analyze the impact of IT vendor in Korea. IT vendors’ characteristics (such as services with asset specificity, size, and nationality) that may affect the success of IT outsourcing are considered. We find that IT outsourcing announcements significantly increase firms’ market value in Korea. In terms of IT vendors’ characteristics, our study find that IT outsourcing announcements with large vendors are statistically significant while with small vendors are not. We also find that the market response to Korean IT vendor is significantly greater than to foreign vendor. However, unlike the US, the difference between IT outsourcing for high asset-specific service and for low asset-specific service is not found

The Casual Relationship Between Information and Communication Technology (ICT) and Foreign Direct Investment (FDI)

This paper investigates the simultaneous causal relationship between investments in information and communication technology and foreign direct investment, with reference to its implications on economic growth. For the empirical analysis we use data from 23 major countries with heterogeneous economics development for the period 1976-1999. The results of unit roots and Johansen co-integration tests indicate variations in degrees of integration among the sample countries. Our causality test results suggest that there is a causal relationship from ICT to FDI interpreted as the higher level of ICT investment leads to increased inflow of FDI. ICT contributes to economic growth indirectly by attracting more foreign direct investment. In developed countries there already exist a build up ICT capacity which causes inflow of FDI, while in developing countries ICT capacity must be build up to attract FDI. The inflow of FDI causes further increases in ICT investment and capacity

Coin Market Behavior using Social Sentiment Markov Chains

2017 was the pivotal year for the cryptocurrency made its foray into the mainstream financial markets. However, in 2018 it was a panic itself. For the market, it is imperative to ruminate reasonable analysis and expectations compiling various situations. We examine the dynamic interactions between the coin market behavior and market events and social metrics to incorporate potential coin traders’ social belief and response into the market moves. We use hidden Markov model performing four different experiments in two-coin markets. We show that market events such as closing price and trading volume are important predictors for the coin market behavior, but not equally in all experiments. Interestingly, hidden Markov process demonstrates that social media metrics fairly explain the future behavior of the coin markets. Overall, this study shows the combined impact of market events and social factors through varied sequences adjusted for each market situation on the coin market behavior

Consumer Privacy and Marketing Avoidance

We introduce consumer avoidance into analytical marketing research. We show that consumer efforts to conceal themselves and to deflect marketing have a crucial impact on sellers¡¯ marketing strategy. Under reasonable conditions, seller marketing is a strategic complement with consumer concealment. Hence, consumer measures to conceal themselves from marketing will increase its cost-effectiveness and lead sellers to market more. Policies that encourage consumers to conceal their identities would lead sellers to increase marketing. By contrast, policies that encourage consumers to deflect seller marketing would lead sellers to reduce marketing. Further, there is a clear need for public policy. To the extent of the externality from the sellers to consumers, the equilibrium levels of marketing (chosen by sellers) and concealment and deflection (chosen by consumers) exceed the social optimum.