Using a closure to avoid code duplication in Python

It is a an acceptable form. As @Giorgio said, I would put the closure after the captured variable definition to ease the flow of reading.

The alternative form would be to define another function, taking a, b, c as parameters. That is 5 parameters which is a lot. The closure allows you avoid repeating yourself in a very simple way. This is a big win for your version.

You can use the timeit module to compare the performances of simple snippets. You should check yourself that a closure is not a heavy machinery. The only problem I see is that it creates more nested elements. So if you find yourself writing a big closure, you should try to extract the complex part outside. But in this case I don't think it is an issue.

import timeit
import random
import string

def func1 (param1, param2):
    def func2(foo, bar):
        return "{0} {1} {2:0.2f} {3} {4} {0}".format('*'*a, b, c, foo, bar)

    a = random.randrange(10)
    b = ''.join(random.choice(string.letters) for i in xrange(10))
    c = random.gauss(0, 1)
    if param1:
        func2(a*c, param1)
    else:
        if param2 > 0:
            func2(param2, param2)

def func4(foo, bar, a, b, c):
    return "{0} {1} {2:0.2f} {3} {4} {0}".format('*'*a, b, c, foo, bar)

def func3 (param1, param2):

    a = random.randrange(10)
    b = ''.join(random.choice(string.letters) for i in xrange(10))
    c = random.gauss(0, 1)
    if param1:
        func4(a*c, param1, a, b, c)
    else:
        if param2 > 0:
            func4(param2, param2, a, b, c)

print timeit.timeit('func1("tets", "")',
 number=100000,
 setup="from __main__ import func1")

print timeit.timeit('func3("tets", "")',
 number=100000,
 setup="from __main__ import func3")

TL;DR: Create function (ideally at import time, not execution time) unless you need to save state

A closure is so named because you "close over" a lexical variable in the enclosing scope. This allows you to save state. That is why you use closures.

If a, b, and c represent variables declared in func1 you have a closure. If they do not represent captured variables from the enclosing scope the you just have a function declared inside a function.

If you want to capture values, but aren't going to modify them I would use functools.partial instead of a closure or a dynamically defined function. ie.

from functools import partial

def func1(a, b):    
  print a, b

def func2(i, j ,k):
  fn = partial(func1, i)
  fn(j)
  fn(k)

I would still make func1 a regular helper function declared outside of func2. Then possibly use partial to save on passing arguments on subsequent calls.