Private Provision of a Complementary Public Good∗

For several years, an increasing number of firms have begun to in-vest in open source software (OSS). While improvements in the OSS are not appropriable, companies can benefit indirectly in a comple-mentary proprietary segment. In this paper we study this incentive for investment in OSS. In particular we ask how market entry affects the incentive to contribute to the public good. Surprisingly, we find that there exist cases where the incumbent firms may benefit from market entry. Moreover, we can show that the equilibrium with an increasing numbers of firms does not converge to the price-taker equi-librium. JEL-classification numbers: to d