Subject: Re: Free Software == Dumping??
From: ghost@aladdin.com (L. Peter Deutsch)
Date: Tue, 27 Jun 95 10:03 PDT

> Did anyone see that comparison some lawyer made (as I recall it was on
> com-priv@psi.com) between free software (specifically Netscape) and
> ``dumping'', which is the supposedly evil practice of selling products
> below the cost of production, in the hopes of driving your competition
> out of business?

I didn't see the comparison.  The question I wonder about is, what is the
"cost of production" for software distributed electronically on public
forums?  There is no unit cost of goods, and if there is no support, there
is no unit labor cost either.  The cost of fetching the software is borne by
the receiver and not incurred by the producer.  So the question seems to
come down to computing/allocating the cost of creating and evolving the
software in the first place (a cost that I gather the Free Software
community considers irrelevant or negligible for the purposes of economic
accounting).

> (tell me again why this hurts society for someone to sell something at
> a price ruinous to them??),

Because if they can afford the negative cash flow long enough, they may
indeed be able to put their competitors out of business, or at least obtain
such a commanding market position as to create a serious barrier to
competitive entry.  Then they will able to charge sufficiently high prices
that customers will wind up paying more in the long run.  That's the theory.
I've seen enough instances of market-position-based barriers to competition
in the software business that I find the theory quite plausible.

L. Peter Deutsch :: Aladdin Enterprises :: P.O. box 60264, Palo Alto, CA 94306
ghost@aladdin.com; voice +1-415-322-0103 (8:30 AM - noon); fax +1-415-322-1734
             "Implementation is the sincerest form of flattery."