Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, February 12, 2014

Switching Costs and Network Effects How Much Do they Really Matter in Mobile Telecommunications?

Mikoaj Czajkowski (Faculty of Economic Sciences, University of Warsaw) and Maciej Sobolewski (Faculty of Economic Sciences, University of Warsaw) ask Switching Costs and Network Effects  How Much Do they Really Matter in Mobile Telecommunications?

ABSTRACT: Our study focuses on the identification and the measurement of switching costs and network effects in mobile telecommunications. Although these two phenomena create similar consumer lock-in mechanisms, there are no empirical studies that integrate them into one model of subscriber's behavior. Our study fills this gap by applying stated preference valuation methods to a representative sample of individual mobile phone users in Poland. We find that number portability can be attributed to only approximately 50% of the total switching costs associated with changing either the provider or the service and the remaining part is associated with status quo inertia. Additionally, we show that because network effects play an important role in service valuation, they lead to strengthening the lock-in mechanisms even further. Our study provides the first empirical measurements of the relative importance of these simultaneous effects and provides the estimates of their monetary value.

http://lawprofessors.typepad.com/antitrustprof_blog/2014/02/switching-costs-and-network-effects-how-much-do-they-really-matter-in-mobile-telecommunications-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef019b03ad044a970c

Listed below are links to weblogs that reference Switching Costs and Network Effects How Much Do they Really Matter in Mobile Telecommunications? :

Comments

Post a comment