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Optimal Digital Product Maintenance with a Continuous Revenue Stream

James Fan and Christopher Griffin

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Abstract: We use a control framework to analyze the digital vendor's profit maximization problem. The vendor captures market share by focusing costly effort on post-launch product maintenance, which influences user perception of the product and drives a revenue stream associated with product use. Our theoretical results show necessary and sufficient conditions for product maintenance to decline over a product's life-cycle, thus showing conditions when Lehman's 7th law of software evolution holds. We also numerically illustrate control paths under different market conditions.

Date: 2014-12, Revised 2017-02
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Handle: RePEc:arx:papers:1412.8624