HW 6

due November 8 (yes, you really have two weeks this time)

Last modified 10/25/99 --PR
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Chapter 8

Recommended: for those interested in understanding the material in chapters 7 and especially 8 in more depth, you might want to peruse a very readable book that's gotten a lot of attention recently. Information Rules: A Strategic Guide to the Network Economy, by Carl Shapiro and Hal Varian.

Check the syllabus for the readings for November 8.

Questions to Think About for Next Week's Class (Ungraded)

  • Based on E8.10 Compare and contrast the following licensing schemes for distributing software and discuss what might motivate an individual or organization to rely on each one.
    1. Conventional click-wrap (as used for commercial software: pay fee and then download a copy)
    2. Shareware
    3. Freeware
    4. Open source
    5. Copyleft (look for copyleft or GNU on the Internet to learn more about this license)
  • (2 bonus points if you actually come up with a good alternative, otherwise ungraded) Suppose you have been hired as a political lobbyist by the American Library Association (ALA). Congress has expressed a desire to keep so-called harmful-to-minors materials from reaching children over the Internet and has proposed legislation that includes a requirement that libraries install software filters on at least some of the  public access terminals in order to receive federal funding. The ALA has taken a strong position against use of software filters on Internet terminals in libraries: one of the fundamental values of librarianship has been to promote access to information, and any content-based restriction on what patrons access calls that fundamental value into question. Your political advisors, however, tell you that it's unwise and ineffective to just be against the legislation, that you need to propose some alternative(s) that will make Congress and the ALA look good while still preserving the values that the ALA holds dear. What alternative(s) would you suggest?
  • Written exercises (due in 2 weeks)

    1. (2) E7.10 Suppose there is an industry effort to create a standard user interface for word processing programs, so that all programs would provide a common set of features, with the same look and feel (e.g., the menus for invoking formatting features would be identical). Following the open-closed principle of interfaces, individual vendors would be free to add features, so long as they preserved the common way of performing the operations specified in the standard.
      1. What might motivate Microsoft, Corel, or Red hat to participate in this process? (If you don't know what these companies do, find out about them by searching on the Web).
      2. Why might they choose not to participate?
      3. Are the answers to a and b different, based on the companies' current market share in the word processing or operating systems market?
    2. (4) E8.3 Concisely answer the following questions:
      1. Does vertical integration make it easier or harder for a company to achieve customer lock-in?
      2. Does product diversification make it easier or harder for a company to achieve customer lock-in?
      3. Does the presence of a widely used open horizontal interface between two layers make vertical integration more or less attractive to a company?
      4. The text describes lock-in as resulting from complementary assets. Suppose that a vendor sells a single product for which there are no complementary products (though there may be some near substitutes). Is there any way for a vendor to create consumer lock-in for such a product?
    3. (1) Based on E8.6 What pricing and versioning strategies would be most advantageous to the seller for each of the following products or services sold over the network? Briefly justify your opinion.
      1. Restaurant reviews and recommendations
      2. A software application for managing investment portfolios
    4. (1) Based on E8.8 For each of the following, what form of intellectual property protection would be suitable for preventing appropriation by other suppliers
      1. A new technique, using cryptographic methods, for protecting information content (e.g., music and videos) from piracy
      2. The name of a new word processing application
      3. The specification of an internal module for an application
      4. A song commemorating the anniversary of the invention of the computer

    Explanation exercise (2)

    Explain the concept of network externalities to someone, and why it is so important to understanding the evolution of the computer and communications industry.