An economic analysis of software piracy in a competitive cloud computing market: A product bundling perspective
In the cloud computing era, incumbent vendors are offering both on-premises software and cloud-based software service. Simultaneously, they are facing competition from new entries who just offer cloud-based software. However, piracy exists in on-premises software for incumbent vendors. Therefore, incumbent vendors are facing pressure from piracy and new entries at the same time. Using the framework of product bundling, this study builds a stylized analytical model to investigate the optimal product bundling strategies for software vendors in the presence of software piracy. The research found that the pure bundling strategy is the best choice for existing software vendors in the market in most cases because of the more flexible bundling price. Pure component strategy can be more profitable than pure bundling strategy when piracy costs are at the medium level.
Liu, Zhiyuan; Yu, Yuexiang; Lv, Jikun; and Zhang, Xiong, "An economic analysis of software piracy in a competitive cloud computing market: A product bundling perspective" (2022). ICEB 2022 Proceedings (Bangkok, Thailand). 5.