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
Date Written: April 27, 2010
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: Suggested Citation