This paper is concerned with the economic trade-offs associated with open-sourcing, the business strategy of releasing the source code of a commercial software product. We model open-sourcing as a strategic option for firms that compete in the market for software products. At the core of our model is the effect of open-sourcing on customer values, as well as the relative ease of customizing the open-source products. We show that open-sourcing can arise as an equilibrium outcome in our two-stage game. If the enhancement of customer value from open-sourcing is moderate or high, in equilibrium firms may find it optimal to release the source code of their commercial software products even when this strategy may reduce their profits.
Asundi, Jai; Carare, Octavian; and Dogan, Kutsal, "Why Do Commercial Firms Open The Source Code Of Their Products?" (2009). MCIS 2009 Proceedings. 99.