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Relating Inertia and Experience in Technology Markets: An Analysis of Households' Personal Computer Choices

39 Pages Posted: 18 Jul 2006 Last revised: 30 Aug 2014

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: April 27, 2010

Abstract

This paper empirically analyzes how households’ PC purchasing behaviors change with market experience. We find that: households generally exhibit inertia in their PC purchases, the level of inertia is increasing as a function of experience on the PC market, and, for households switching brands, the likelihood of buying a lesser-known brand increases with experience, regardless of the brand of the previous purchase. These findings are consistent with the predictions of a simple learning model, and extend our understanding of how market experience affects purchasing behavior to an important technology product, with implications that may apply to other similar products.

Keywords: Technology good, personal computer, inertia, market evolution, brand choice, true vs. spurious state dependence, durable good, consumer learning

JEL Classification: D12, L63, L11

Suggested Citation

Prince, Jeffrey, Relating Inertia and Experience in Technology Markets: An Analysis of Households' Personal Computer Choices (April 27, 2010). Available at SSRN: https://ssrn.com/abstract=917868 or http://dx.doi.org/10.2139/ssrn.917868

Jeffrey Prince (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

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