Crowdsourcing Distribution on Software Market

Abstract

Software producers may choose to deliver products through a community of external institutions or individuals rather than paid employees. In the model, a computer game producer with a developed “game 1” may [a] sell game 1 allowing modifications (i.e., an external community develops game 2 based on game 1), [b] develop game 2 internally and sell it separately, or [c] develop game 2 internally and sell it as an optional addon to game 1. The firm’s profit and social welfare under each option is explored. An app-storelike market structure (in which the community is allowed to sell game 2) is also considered.