2012 | OriginalPaper | Chapter
Software Licensing in the Case of No Network Effects
Authors : Shengli Li, Hsing Kenneth Cheng
Published in: E-Life: Web-Enabled Convergence of Commerce, Work, and Social Life
Publisher: Springer Berlin Heidelberg
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Traditionally, consumers purchase software by paying the price upfront and install the software on their computers. However, allowing consumers “pay as you go” by subscribing to the software has become increasingly popular. The two licensing models are referred to as “on-premises model” and “Software as a Service (SaaS) model” respectively. This paper studies the software vendor’s choice of the two models considering consumers’ uncertainty on the software quality and the software upgrading issue.