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

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Author Info

  • Ashish Arora

    ()
    (H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, Pennsylvania 15213)

  • Jonathan P. Caulkins

    ()
    (H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, Pennsylvania 15213)

  • Rahul Telang

    ()
    (H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, Pennsylvania 15213)

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 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. We also show that for comparable costs, a software monopolist releases the product with more bugs but invests more in post-patching support later than the physical good monopolist.

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File URL: http://dx.doi.org/10.1287/mnsc.1050.0440
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 52 (2006)
Issue (Month): 3 (March)
Pages: 465-471

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Handle: RePEc:inm:ormnsc:v:52:y:2006:i:3:p:465-471

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Related research

Keywords: patching; software quality; time of entry; fixed costs; software bugs;

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Cited by:
  1. Laksana, Kamonkan & Hartman, Joseph C., 2010. "Planning product design refreshes with service contract and competition considerations," International Journal of Production Economics, Elsevier, vol. 126(2), pages 189-203, August.
  2. Arora, Ashish & Forman, Chris & Nandkumar, Anand & Telang, Rahul, 2010. "Competition and patching of security vulnerabilities: An empirical analysis," Information Economics and Policy, Elsevier, vol. 22(2), pages 164-177, May.

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