THE EFFECT OF SHORTENING LOCK-IN PERIODS IN TELECOMMUNICATION SERVICES

• 成果类型: Article
• 署名作者: Yang, Baojiang; de Matos, Miguel Godinho; Ferreira, Pedro
• 署名单位: Universidade Catolica Portuguesa; Carnegie Mellon University
• 刊物名称: MIS QUARTERLY
• ISSN/ISSBN: 0276-7783
• DOI: 10.25300/MISQ/2020/14839
• 发表日期: 2020
• 页码: 1391-1409
• 关键词: switching costs; rates

摘要

In this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.