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Economic Incentives in Software Design

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  • Varian, Hal R

Abstract

I examine the incentives for software providers to design appropriate user interfaces. There are two sorts of costs involved when one uses software: the fixed cost of learning to use a piece of software and the variable cost of operating the software. I show that a monopoly provider of software generally invests the right amount of resources in making the software easy to learn, but too little in making it easy to operate. In some extreme cases a monopolist may even make the software too easy to learn. Citation Copyright 1993 by Kluwer Academic Publishers.

Suggested Citation

  • Varian, Hal R, 1993. "Economic Incentives in Software Design," Computational Economics, Springer;Society for Computational Economics, vol. 6(3-4), pages 201-217, November.
    • Handle: RePEc:kap:compec:v:6:y:1993:i:3-4:p:201-17
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    Cited by:

    1. V. Krishnan & W. Zhu, 2006. "Designing a Family of Development-Intensive Products," Management Science, INFORMS, vol. 52(6), pages 813-825, June.
    2. Marc Prud’homme & Dimitri Sanga & Kam Yu, 2005. "A computer software price index using scanner data," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(3), pages 999-1017, August.
    3. Alexandre Gaudeul, 2004. "The LaTeX project: A case study of open-source software," Industrial Organization 0409009, University Library of Munich, Germany.

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