Subscription Choices and Switching Costs in Mobile Telephony

27 Pages Posted: 13 Oct 2007

Date Written: September 2007

Abstract

In this article, we estimate the price elasticities of demand for subscription and consumer switching costs for mobile telephony. We use a panel of Portuguese consumer level data to estimate a series of multinomial and mixed logit models. The demand for subscription is elastic. Switching costs are large. We use the structural model to perform several policy exercises. Switching costs and brand preferences are shown to be important elements of the market structure of mobile telephony. Price mediated network effects seem to be relatively less important.

Keywords: Mobile Telephony, Switching Costs, Mixed Logit

JEL Classification: L13, L43, L93

Suggested Citation

Grzybowski, Lukasz and Pereira, Pedro, Subscription Choices and Switching Costs in Mobile Telephony (September 2007). NET Institute Working Paper No. 07-12, Available at SSRN: https://ssrn.com/abstract=1021324 or http://dx.doi.org/10.2139/ssrn.1021324

Lukasz Grzybowski (Contact Author)

Télécom Paris ( email )

19 Place Marguerite Perey
Palaiseau, 91120
France

Pedro Pereira

Autoridade da Concorrência ( email )

1050-138 Lisboa
Portugal

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