Sell First, Fix Later: Impact of Patching on Software Quality

21 Pages Posted: 21 Feb 2005

See all articles by Ashish Arora

Ashish Arora

Duke University - Fuqua School of Business; National Bureau of Economics Research; Duke Innovation & Entrepreneurship Initiative

Jonathan P. Caulkins

Carnegie Mellon University

Rahul Telang

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

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

Arora, Ashish and Caulkins, Jonathan P. and Telang, Rahul, Sell First, Fix Later: Impact of Patching on Software Quality (October 2004). Available at SSRN: https://ssrn.com/abstract=670285 or http://dx.doi.org/10.2139/ssrn.670285

Ashish Arora (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economics Research

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Jonathan P. Caulkins

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

Rahul Telang

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

4800 Forbes Ave
Pittsburgh, PA 15213-3890
United States
412-268-1155 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
306
Abstract Views
2,524
Rank
181,046
PlumX Metrics