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]]>You said “It never will be free for the reasons you point out, but also because the hardware will never be free.”
However, hypothetically, if hardware was free demand for software would be greater, leading to higher prices. I don’t think software development would stop if no new hardware came out, it would just be more costly to make a better product, reinforcing the fact that a price must exist for the product.
The fundamental difference in what we believe depends on how we view the evolution of software. I think that improving software has a long-run increasing marginal cost.
I do completely agree that hardware innovation makes software development more profitable, but that comes from the fact they are complementary goods, and improving the quality of one good increases the value of the other good. However, if hardware was hypothetically free I don’t think it would lead to software becoming free.
]]>With technology “stuck” at a constant level, the programming for that level would become easier and easier. “New” software will abound as small innovations are made, existing software is replicated, but without much obselesence of older software. Eventually free-ware would catch up to pay-ware in its sophistication.
Without very strict IP protection people will eventually find the software sophistication level they are happy with and stop purchasing “new” software.
In the short to medium run the relationship may be as you describe, with free hardware leading to a large increase in demand for software, and its price, but not in the long run.
]]>William, the best out there for numerical modeling is Matlab, particularly in application domain such as economics. Nothing can beat Matlab. It has a huge built-in library (no need to re-invent anything), plus a huge worldwide users . I used Mathematica when I was at varsity purely for symbolic calculations, ie, calculations that you require to solve an equation and the solution is a closed-form solution (another equation). I use Matlab mostly for proto-typing and testing my numerical model, then I code it in Java for deployment.
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