NETWORK EFFECTS AND SWITCHING COSTS IN THE US WIRELESS INDUSTRY

• 成果类型: Article
• 署名作者: Weiergraeber, Stefan
• 署名单位: Indiana University System; Indiana University Bloomington
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12543
• 发表日期: 2022
• 页码: 601-630
• 关键词: competition; demand; prices

摘要

I estimate a model of dynamic consumer behavior to disentangle switching costs and network effects in the U.S. wireless industry. A detailed panel on market shares and churn rates, disaggregated by demographic consumer types and local markets, allows me to separately identify preference heterogeneity, switching costs, and a localized direct network effect. My switching cost estimates range from USD 47 to USD 178. The average willingness-to-pay for a 15 percentage point increase in a carrier's market share is USD 8.50 per month. Finally, I show that ignoring either one of the effects results in substantial errors when simulating counterfactuals.