An empirical analysis of switching cost in the smartphone market in South Korea. Issue 4 (April 2016)

• Record Type: Journal Article
• Authors: Park, Yuri; Koo, Yoonmo
• Is Part Of: Telecommunications policy. Volume 40 Issue 4(2016)
• Page Start: 307
• Page End: 318
• Publication Date: 2016-04
• Subjects: Switching costs -- Smartphone -- Telecommunication policy -- Bayesian multinomial logit; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2016.01.004
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: Switching cost is an important factor for policy makers to consider because it sets a higher price for locked-in consumers by making the market less competitive. Though there has been some empirical research analyzing switching costs in the mobile telecommunications market, studies considering the characteristics of smartphones, which have their own operating systems and applications, are still rare. In this study, we conduct a hypothetical conjoint survey to analyze switching cost in the smartphone handset market and derive the cost by using the hierarchical Bayesian multinomial logit model to consider respondents׳ heterogeneity. Switching costs of handsets and OS are empirically estimated, and the magnitudes depend on the levels of searching cost, learning cost, and uncertainty when purchasing new smartphones. Highlights: This study analyzes switching costs in the smartphone device market. We use hierarchical Bayesian multinomial logit model. Switching cost of mobile device is non-negative. Switching cost of mobile OS is 202.7 thousand KRW. Switching costs are dependents on consumer characteristics.