Abstract
We develop a general equilibrium model to study the implications of a legal environment on the organization of software production. We show that contract enforcement determines the organizational mode (i.e., in-house versus outsourcing) of customized software development while copyright protection affects both packaged software as well as customized software development. We obtain some testable results: when copyright protection is weak, only customized software will be developed; when copyright protection is strong, both customized software and packaged software will be developed; environment changes in one software market affect the equilibrium in the other software market.
| Original language | English |
|---|---|
| Pages (from-to) | 1661-1682 |
| Number of pages | 22 |
| Journal | European Economic Review |
| Volume | 50 |
| Issue number | 7 |
| Early online date | 22 Sept 2005 |
| DOIs | |
| Publication status | Published - Oct 2006 |
| Externally published | Yes |
Bibliographical note
Financial support by a grant from HKUST (DAG03/04.BM28).Keywords
- Software
- Piracy
- Copyright protection
- Contract enforcement
- Vertical integration
- Contract
- Organization
- Outsourcing