Openness and competition in information technology

Markus Wagner
2011 unpublished
This master thesis scrutinizes the topic of openness, a generalization of many important subtopics, in information technology and it's economic properties. Examples of subtopics that are included in the definition of openness are open source, compatibility, standards, interfaces and licensing. The work is structured into two major parts: In the first one a study is done about the history and strategy with a focus on openness about Microsoft, Apple and Google, three of the most important
more » ... s in information technology. This study shows that those strategies are quite different but also changed over time. While Microsoft adopted a closed approach that opened up a little in recent years (partly because of pressure from competition authorities) Google always relied on openness with the exception of it's most important technology: It's search algorithm. Apple is in many ways even more closed than Microsoft, although it seems to be more open with respect to open source, especially when it improves the quality of it's own products. In the second part of this work an economic model is developed which includes network economics, vertical product differentiation and an incumbent-entrant-scheme with economies of scale. In this 4-stage model with 2 companies it is possible to discuss certain aspects of competition and openness in this industry and this is done with applications of operating systems licensing and some economic aspects and incentives of open source (impossible market entry, signaling incentives, external revenues). The results are dependent on the chosen model parameters but some general results can be shown nevertheless: That licensing is most likely optimal whenever market entry by the second firm is possible and that an open source strategy indeed makes sense when the discussed aspects and incentives hold true.
doi:10.25365/thesis.15899 fatcat:eve36lwlirhh7b2jd7aih2flhm