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

Author

Listed:
  • 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.

Suggested Citation

  • Ashish Arora & Jonathan P. Caulkins & Rahul Telang, 2006. "Research Note--Sell First, Fix Later: Impact of Patching on Software Quality," Management Science, INFORMS, vol. 52(3), pages 465-471, March.
    • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:3:p:465-471
    DOI: 10.1287/mnsc.1050.0440
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    References listed on IDEAS

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    Cited by:

    1. Wang, Yu & Li, Minqiang & Feng, Haiyang & Feng, Nan, 2023. "Which is better for competing firms with quality increasing: behavior-based price discrimination or uniform pricing?," Omega, Elsevier, vol. 118(C).
    2. Ravi Sen & Joobin Choobineh & Subodha Kumar, 2020. "Determinants of Software Vulnerability Disclosure Timing," Production and Operations Management, Production and Operations Management Society, vol. 29(11), pages 2532-2552, November.
    3. Vidyanand Choudhary & Zhe (James) Zhang, 2015. "Research Note—Patching the Cloud: The Impact of SaaS on Patching Strategy and the Timing of Software Release," Information Systems Research, INFORMS, vol. 26(4), pages 845-858, December.
    4. 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.
    5. Anshul Tickoo & P. K. Kapur & A. K. Shrivastava & Sunil K. Khatri, 2016. "Testing effort based modeling to determine optimal release and patching time of software," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(4), pages 427-434, December.
    6. Debabrata Dey & Atanu Lahiri & Guoying Zhang, 2015. "Optimal Policies for Security Patch Management," INFORMS Journal on Computing, INFORMS, vol. 27(3), pages 462-477, August.
    7. Dawoon Jung & Byung Cho Kim & Myungsub Park & Detmar W. Straub, 2019. "Innovation and Policy Support for Two-Sided Market Platforms: Can Government Policy Makers and Executives Optimize Both Societal Value and Profits?," Information Systems Research, INFORMS, vol. 30(3), pages 1037-1050, September.
    8. 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.
    9. Zhong-Zhong Jiang & Na He & Xuwei Qin & Minghe Sun & Pengfei Wang, 2022. "Optimizing production and maintenance for the service-oriented manufacturing supply chain," Annals of Operations Research, Springer, vol. 316(1), pages 33-58, September.
    10. Yuchen Zhang & Jingjing Li & Tony W. Tong, 2022. "Platform governance matters: How platform gatekeeping affects knowledge sharing among complementors," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 599-626, March.
    11. Gabriel A. Giménez Roche & Didier Calcei, 2021. "The role of demand routines in entrepreneurial judgment," Small Business Economics, Springer, vol. 56(1), pages 209-235, January.
    12. Zhengrui Jiang & Sumit Sarkar & Varghese S. Jacob, 2012. "Postrelease Testing and Software Release Policy for Enterprise-Level Systems," Information Systems Research, INFORMS, vol. 23(3-part-1), pages 635-657, September.
    13. Ashish Arora & Ramayya Krishnan & Rahul Telang & Yubao Yang, 2010. "An Empirical Analysis of Software Vendors' Patch Release Behavior: Impact of Vulnerability Disclosure," Information Systems Research, INFORMS, vol. 21(1), pages 115-132, March.
    14. Terrence August & Marius Florin Niculescu, 2013. "The Influence of Software Process Maturity and Customer Error Reporting on Software Release and Pricing," Management Science, INFORMS, vol. 59(12), pages 2702-2726, December.
    15. Yogita Kansal & Gurinder Singh & Uday Kumar & P. K. Kapur, 2016. "Optimal release and patching time of software with warranty," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(4), pages 462-468, December.
    16. Karthik Kannan & Mohammad S. Rahman & Mohit Tawarmalani, 2016. "Economic and Policy Implications of Restricted Patch Distribution," Management Science, INFORMS, vol. 62(11), pages 3161-3182, November.
    17. Terrence August & Tunay I. Tunca, 2008. "Let the Pirates Patch? An Economic Analysis of Software Security Patch Restrictions," Information Systems Research, INFORMS, vol. 19(1), pages 48-70, March.
    18. Cornelius Fritz & Co-Pierre Georg & Angelo Mele & Michael Schweinberger, 2024. "A Strategic Model of Software Dependency Networks," Papers 2402.13375, arXiv.org.

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