Lock-In and Unobserved Preferences in Server Operating System Adoption: A Case of Linux vs. Windows

Seung-Hyun Hong and Leonardo Rezende

No 07-05, Working Papers from NET Institute

Abstract: This paper attempts to distinguish state dependence (or lock-in) from unobserved preferences in the decision to adopt Linux or Windows as the operating system for computer servers. To this end, we use detailed survey data of over 100,000 establishments in the United States. Without accounting for unobserved heterogeneity in establishment-specific preferences for operating systems, we find a strong positive correlation between the current choice and the previous choice, suggesting potentially high switching costs and lock-in. To account for unobserved preferences for either operating system, we impose weak identifying assumptions and employ recently developed dynamic discrete choice panel data methods (Arellano and Carrasco 2003). The results show little or no evidence of state dependence, implying that unobserved preferences, rather than switching costs and lock-in, are more important factors in the adoption decision. Once taste heterogeneity is taken into account, we additionally find little evidence of network effects between server operating systems and non-server operating systems.

Pages: 35 pages
Date: 2007-04
New Economics Papers: this item is included in nep-dcm, nep-ict, nep-mic and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.netinst.org/Hong-Rezende_07-05.pdf (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:0705

Access Statistics for this paper

More papers in Working Papers from NET Institute
Bibliographic data for series maintained by Nicholas Economides ().