The Quantity Competition between Open Source and Proprietary Software

By modifying Cournot model, this paper researches the quantity competition between open source software (OSS) and proprietary software (PS) in a software market exhibiting network externality. We assume open source software is free for users and proprietary software producer pursues profit maximization, and find the following results: (i) the optimal quantity of PS is bigger than that of OSS when the learning (maintenance or development) cost of OSS is high enough, and the opposite situation may appear when the learning (maintenance or development) cost of OSS is low enough, (ii) the optimal price, quantity and profit of PS increase with the learning (maintenance or development) cost of OSS, (iii) the optimal quantity of OSS decreases with the learning (maintenance or development) cost of OSS, (iv) the optimal price of PS decreases with the software development skills of OSS user and intensity of network externality.