Estimating Consumer Lock-In Effects from Firm-Level Data

Gabor Kezdi and Gergely Csorba ()

Journal of Industry, Competition and Trade, 2013, vol. 13, issue 3, 452 pages

Abstract: This paper proposes a practical method for estimating consumer lock-in effects from firm-level data. The method compares the behavior of already contracted consumers to the behavior of new consumers, the latter serving as a counterfactual to the former. In panel regressions on firms’ incoming and quitting consumers, we look at the differential response to price changes and identify the lock-in effect from the difference between the two. We discuss the potential econometric issues and measurement problems and offer solutions to them. We illustrate our method by analyzing the market for personal loans in Hungary and find strong lock-in effects. Copyright Springer Science+Business Media New York 2013

Keywords: lock-in; switching costs; demand analysis; difference-in-differences; personal loans; C33; D12; L13 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Estimating consumer lock-in effects from firm-level data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:13:y:2013:i:3:p:431-452

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DOI: 10.1007/s10842-012-0149-2

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