The impact of software patents on the structure of the software market - a simulation model

The issue of software patents is widely discussed in Europe today. The standard economic rationale for patents is to protect potential innovators from imitation, which ultimately provides the incentive to incur the costs of innovation. This incentive topic is strongly discussed in network effect markets such as the software market. We identified five characteristics of software which are crucial for the question of patenting and its consequences: Sequentiality, complementarity, the utilization and availability of open code and the necessity to ensure interoperability as well as the digital character of the goods. Based on seven assumptions affiliated from the literature, we developed a bipartite central probability model comparing a deregulated market without patents to a market using the patent system. The main objectives were to evaluate the frequency of innovations in the software market and on the other hand to investigate monopolistic tendencies. We simulated our model under two ...

• Type: Conference
• Year: 2003
• Where: ECIS
• Authors: Norman Hoppen, Daniel Beimborn, Wolfgang König
• Keywords: ECIS 2003, Information Technology, Patent, Pessimistic Environment, Software Market