'Hybrid ' Competition, Innovation Outcomes and Regulation: a Duopoly Model

Abstract

This paper presents a duopoly model in which a commercial organization and a community compete by providing digital products while being able to share their innovation outputs to develop their own activities. The commercial organization always benefits from either a 'closed ' or an 'open ' institutional regime shift. Our numerical analysis evidences that the 'closed ' shift provides the best levels of innovation and welfare whereas it is not found to be profit-improving when product differentiation is small. This result partially qualifies the conventional idea according to which public policies may be designed to defend commercial interests rather than public ones.(original abstract)