Non-User Utility and Market Power: The Case of Smartphones

Leonardo Bursztyn (bursztyn@uchicago.edu), Rafael Jiménez-Durán (rafael.jimenez@unibocconi.it), Aaron Leonard (aaronleonard@uchicago.edu), Filip Milojević (milojevic@uchicago.edu) and Christopher Roth (roth@wiso.uni-koeln.de)
Additional contact information
Leonardo Bursztyn: University of Chicago & NBER
Rafael Jiménez-Durán: Bocconi University, IGIER & Chicago Booth Stigler Center
Aaron Leonard: University of Chicago
Filip Milojević: University of Chicago
Christopher Roth: University of Cologne, NHH, Max Planck Institute for Research on Collective Goods, IZA & CEPR

No 360, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Firms can increase the demand for their products and consolidate their market power not only by increasing user utility but also by decreasing non-user utility. In this paper, we examine this mechanism by considering the case of smartphones. In particular, Apple has faced criticism for allegedly degrading the Android user experience by making messages to Android devices appear as green bubbles on iPhones—a salient signal often perceived as reflecting a lower socioeconomic status. Using samples of US college students, we show that green bubbles are widely stigmatized and that a majority of both iPhone and Android users would prefer green bubbles to no longer exist. We then conduct an incentivized deactivation experiment, revealing that iPhone users have a significant willingness to pay to prevent their messages from appearing as green bubbles on other iPhones. Next, we examine the market implications of non-user utility and find that respondents are substantially more likely to choose an Android over an iPhone when green bubbles are removed. We conclude by presenting case studies that illustrate how companies use product features to reduce non-user utility in various markets.

Keywords: Non-user utility; Stigma; Market Power; Consumer Welfare; Anti-trust. (search for similar items in EconPapers)
JEL-codes: D83 D91 J15 P16 (search for similar items in EconPapers)
Pages: 97
Date: 2025-04
New Economics Papers: this item is included in nep-com, nep-dcm, nep-exp and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_360_2025.pdf First version, 2025 (application/pdf)

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:ajk:ajkdps:360

Access Statistics for this paper

More papers in ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany Niebuhrstrasse 5, 53113 Bonn, Germany.
Bibliographic data for series maintained by ECONtribute Office (research@econtribute.de).