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Estimating Consumer Inertia in Repeated Choices of Smartphones

Lukasz Grzybowski and Ambre Nicolle

22nd ITS Biennial Conference, Seoul 2018. Beyond the boundaries: Challenges for business, policy and society from International Telecommunications Society (ITS)

Abstract: In this paper, we use a unique database on switching between mobile handsets in a sample of about 5,000 subscribers using tariffs without commitment from a single mobile operator on monthly basis between March 2012 and December 2014. We estimate discrete choice model in which we account for disutility from switching to a different operating systems and handset brands and for unobserved time-persistent preferences for operating systems and brands. Our estimation results indicate presence of significant state-dependency in the choices of operating systems and brands. We find that it is harder for consumers to switch from iOS to Android and other operating systems than from Android and other operating systems to iOS. Moreover, we find that there is significant time-persistent heterogeneity in preferences for different operating systems and brands, which also leads to state-dependent choices. We use our model to simulate market shares in the absence of switching costs and conclude that the market share of Android and smaller operating systems would increase at the expense of the market share of iOS.

Keywords: Smartphones; Consumer Inertia; Switching Costs; Mixed Logit; iOS; Android (search for similar items in EconPapers)
JEL-codes: L13 L50 L96 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-com, nep-dcm, nep-ict, nep-ind, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
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