Software quality: a market perspective

The author investigates software quality in a market setting. He points out that imperfections in reputation place downward pressure on a product´s price and lower the average quality of the delivered software. Testing, verification, and validation improve quality only when reputation is important to end users, when demand satiation is low, and when the marginal cost of improving quality is low in comparison with the improvement in quality. As firms improve total quality control, testing, verification, and validation become less relevant, until they may actually become counterproductive. Where complex products are produced, high quality may lower marginal costs of software, and this is shown to provide an accelerator effect that enhances other competitive strategies. Warranties can ameliorate the underprovision of quality by improving software reputation. But even with warranties, the authors shows that software developers will tend to underprovide quality