Effects of Consumer Preferences on Endogenous Switching Costs

Endogenous Switching Cost;Consumer Preferences;Management Sciences

Kwong, Raymond

University of Waterloo

关键词: Endogenous Switching Cost;    Consumer Preferences;    Management Sciences;   

Others  :  https://uwspace.uwaterloo.ca/bitstream/10012/7061/1/Kwong_Raymond.pdf

瑞士|英语

来源: UWSPACE Waterloo Institutional Repository

【 摘 要 】

The paper provides a model that assesses the set of complementary components of varying compatibility and its effect towards consumer adoption decisions.The smartphone market is a system good which utilizes the device and a set of compatible applications (apps).The amount of switching costs may vary depending upon the consumer’s decision to switch devices or across platforms.Analyzing the Android ecosystem, the process of custom ROMs (and rooting) and the large set of games, news, etc. apps justify the existence of device-specific and platform-specific apps.The model reinforces the findings of a survey conducted by UBS suggesting the retention rate (i.e. level of switch costs) of Apple users is higher than Android users.The retention among Android devices is much lower in comparison as well.The model observes that the product fragmentation and the interdependence of apps lead to the noticeably lower retention rates across Android devices and platforms.