This doesn't respond to my point about transaction costs (which you don't address). These are things such as (re)training staff, printing new manuals, hiring new devs, etc. The cost of the *switch* itself, not the cost of the *product* to which one is switching.
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Frank Lloyd Righteous, Ph.D Misanthropologist Retweeted
Your original point to which I responded wasn't supported by Coase the way you said it was. Coase's work on the *marginal cost problem* (to which you referred) didn't really relate to his work on *transaction costs* where he set forth the Coase Theorem. https://twitter.com/unhygenicmacro/status/1173783915439542272 …
Frank Lloyd Righteous, Ph.D Misanthropologist added,
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I fully understand why OSS exists. That's never been an issue. No, you're wrong because you're conflating marginal cost with transaction cost, and they're very distinct concepts. Transaction cost (the focus of the Coase Theorem) has little, if any, relation to marginal cost.
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Replying to @BostonDelendEst @MorlockP
OSS exists because software has near-zero marginal cost of production, as with most digital items. That's not Coase. Despite its near-zero marginal price, the software market retains substantial transaction costs.
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Replying to @BostonDelendEst @MorlockP
What Coase said in his eponymous theorem is that regardless of who is initially allocated the right, when transaction costs are low/negligible, you'll end up with the Pareto-efficient/optimal allocation. That doesn't relate to or dictate the marginal cost (or pricing) of OSS.
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I've stated a few times now that there are substantial transaction costs in the software market that are distinct from the marginal cost of producing an additional unit of software, or of the pricing of OSS. Because there are substantial transaction costs, Coase doesn't apply.
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switching costs matter when customer X with machine Y exists and is moving from os A to B switching costs don't matter when customer X exists, but customer Q is entering the market place and can pick any solution he wants
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