Sell First, Fix Later: Impact of Patching on Software Quality
21 Pages Posted: 21 Feb 2005
Date Written: October 2004
Abstract
We present a model of fixing or patching a software problem after the product has been released in the market. Specifically, we model a software firm's trade-off in releasing a buggy product early and investments in fixing it later. Just as the marginal cost of producing software can be effectively zero, so can be the marginal cost of repairing multiple copies of defective software by issuing patches. We show that due to the fixed cost nature of investments in patching, a software vendor has incentives to release a buggier product early and patch it later in a larger market. Thus, a software monopolist releases a product with fewer bugs but later than what is socially optimal. We contrast this result with physical good markets where market size does not play any role in quality provision.
Keywords: software quality, patching, monopoly, market size, fixed cost
JEL Classification: L15, L89
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Optimal Policy for Software Vulnerability Disclosure
By Ashish Arora, Rahul Telang, ...
-
Internet Security, Vulnerability Disclosure and Software Provision
By Jay Pil Choi and Chaim Fershtman
-
By Rahul Telang and Sunil Wattal
-
To Disclose or Not? An Analysis of Software User Behavior
By Dmitri Nizovtsev and Marie C. Thursby
-
An Empirical Analysis of Vendor Response to Software Vulnerability Disclosure
By Ashish Arora, Ramayya Krishnan, ...
-
Product Adoption and Profitability in an Industry with Malicious Market Players
By Michael Galbreth and Mikhael Shor