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Renting software applications from an application service provider is generally assumed to provide significant overall cost savings. Whether these savings benefit the customer or provide high profit margins for the provider is a priori not clear. Lock-in of customers might reduce competition and enable the service provider to charge premium prices. We investigate in this paper the strength of lock-in with application service providers and identf the features in service contracts that can be used to reduce the lock-in.keywordsapplication service providersoftware economicslock-in
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