Subject: Re: Economic incentives to produce software in a free software regime
From: "Stephen J. Turnbull" <>
Date: Wed, 27 Oct 1999 18:36:56 +0900 (JST)

>>>>> "kms" == Karsten M Self <> writes:

    kms> The definition used by Varian and Shapiro is (paraphrased):

    kms>  - Bundling: selling a combination of products at a price
    kms> lower than the cost of the individual components.

    kms>  - Tying: bundling, without the option to purchase the
    kms> unbundled components.

    kms> Bundling is legal.  Tying can be construed as monopolistic
    kms> activity.

Oops.  My very very bad.  Not only am I not trying to understand what
the speaker means, it appears I've gotten sloppy (and hang around with 
other sloppy economists).  And I just taught from S&V last term.

Oh, the shame, the shame of it all....

    kms> Empirical evidence appears to bear this out -- pricing for
    kms> legitimate software is greatly discounted in high-piracy
    kms> regions such as Hong Kong, Muratia, and Eastern Europe.

The empirical evidence is very unreliable.  Hong Kong, OK, but Eastern
Europe the demand is going to be low anyway (in the sense of
reservation prices, not quantity demanded), so they will charge less
even if there is _no_ piracy.

University of Tsukuba                Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
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What are those two straight lines for?  "Free software rules."