To Root or Not to Root? The Economics of Jailbreak

28 Pages Posted: 6 Jun 2013

See all articles by Hong Chao

Hong Chao

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Chun-Yu Ho

State University of New York (SUNY) - Department of Economics

Tin Cheuk Leung

Wake Forest University

Travis Ng

The Chinese University of Hong Kong (CUHK) - Department of Economics

Date Written: June 5, 2013

Abstract

We construct a structural model that allows us to jointly estimate the demand for smartphones and paid apps using a Bayesian approach. Our data comes from more than 500 college students in Hong Kong and Shanghai. We find that the moral cost rather than the monetary cost of jailbreaking smartphones determines its prevalence. Users mainly jailbreak smartphones to use paid apps for free, a reason more important among Android users than iPhone users. Paid apps contribute the lion's share of the profits (between 53% and 71%) for both the Android and iPhone. Strictly prohibiting jailbreaking would decrease the aggregate market share of smartphones in the cell phone market. Apple, however, would sell even more iPhones at the expense of Android smartphones.

Keywords: jailbreak, demand estimation, smartphones

JEL Classification: L14, L86, K42, O34

Suggested Citation

Chao, Hong and Ho, Chun-Yu and Leung, Tin Cheuk and Ng, Travis, To Root or Not to Root? The Economics of Jailbreak (June 5, 2013). Available at SSRN: https://ssrn.com/abstract=2274064 or http://dx.doi.org/10.2139/ssrn.2274064

Hong Chao

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

Chun-Yu Ho

State University of New York (SUNY) - Department of Economics ( email )

1400 Washington Ave
Albany, NY 12222
United States

Tin Cheuk Leung (Contact Author)

Wake Forest University ( email )

Winston-Salem, NC 27109
United States

Travis Ng

The Chinese University of Hong Kong (CUHK) - Department of Economics ( email )

Shatin, N.T.
Hong Kong

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