Discussion Paper Details

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Title: The Jukebox Mode of Innovation - A Model of Commercial Open Source Development

Author(s): Joachim Henkel

Publication Date: July 2004

Keyword(s): development collaboration, embedded linux, innovation and open source software

Programme Area(s): Industrial Organization

Abstract: In this Paper, I explore the circumstances under which innovation processes without secrecy or intellectual property protection are viable, and where free revealing of innovations is a profit-maximizing strategy. Motivated by an empirical study of embedded Linux, I develop a duopoly model of quality competition. Firms require two complementary technologies as inputs, but differ with respect to the relative importance of these technologies. I find that a regime with compulsory revealing can lead to higher product qualities and higher profits than a proprietary regime. When the decision to reveal is endogenized, equilibria with voluntary revealing arise, again superior to the proprietary outcome.

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Bibliographic Reference

Henkel, J. 2004. 'The Jukebox Mode of Innovation - A Model of Commercial Open Source Development'. London, Centre for Economic Policy Research.