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Willingness to Pay in an Open Source Software Environment

Department of Information Systems, Arizona State University, Tempe, Arizona 85287
Department of Marketing, Arizona State University, Tempe, Arizona 85287
Department of Information Systems, Arizona State University, Tempe, Arizona 85287
College of Business Administration, Abilene Christian University, Abilene, Texas 79699
raghu.santanam{at}asu.edu
rajiv.sinha{at}asu.edu
ajay.vinze{at}asu.edu
orneita.burton{at}coba.acu.edu

Competition from open source software and free software (OSS/FS) alternatives is causing proprietary software producers to reevaluate product strategies. OSS/FS alternatives complicate an already complex information goods market plagued by piracy concerns. Although producer perspectives on software pricing and piracy controls have been addressed extensively, consumers' perspective and willingness to pay for commercial software is not very well understood. This paper empirically determines willingness to pay for a leading commercial software application (Microsoft Office) in the presence of an OSS/FS alternative. A contingent valuation approach is used to elicit willingness to pay for the application. The research design employs a 2 x 2 x 2 experiment to investigate the impact of preventive control, deterrence control, and OSS/FS alternative. The results indicate that the availability of an OSS/FS alternative has little impact on willingness to pay for Microsoft Office. However, piracy controls significantly increase willingness to pay for Microsoft Office, even in the presence of OSS/FS alternatives.

Key Words: software piracy; intellectual property; open source software; willingness to pay; contingent valuation
History: This paper was received on September 13, 2006.