Estimating the Lock-in Effects of Switching Costs from Firm-Level Data

Gabor Kezdi and Gergely Csorba ()

No 1108, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: This paper proposes a simple method for estimating the lock-in effects of switching costs from firm-level data. We compare the behavior of already contracted consumers to the behavior of new consumers as the latter can serve as contrafactual 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 of switching costs from the difference between the two. We illustrate our method by analyzing the Hungarian personal loan market and find strong lock-in effects.

Keywords: switching costs; lock-in; panel data (search for similar items in EconPapers)
JEL-codes: C33 D12 L13 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2011-02
New Economics Papers: this item is included in nep-bec and nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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