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Lock-in and unobserved preferences in server operating systems: A case of Linux vs. Windows

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  • Hong, Seung-Hyun
  • Rezende, Leonardo

Abstract

This paper investigates to what extent the persistence of Microsoft Windows in the market for server operating systems is due to lock-in or unobserved preferences. While the hypothesis of lock-in plays an important role in the antitrust policy debate for the operating systems market, it has not been extensively documented empirically. To account for unobserved preferences, we use a panel data identification approach based on time-variant group fixed effects, and estimate the dynamic discrete choice panel data model developed by Arellano and Carrasco (2003). Using detailed establishment-level data, we find that once we account for unobserved preferences, the estimated magnitudes of lock-in are considerably smaller than those from the conventional approaches, suggesting that unobserved preferences play a major role in the persistence of Windows. Further robustness checks are consistent with our findings.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 167 (2012)
Issue (Month): 2 ()
Pages: 494-503

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Handle: RePEc:eee:econom:v:167:y:2012:i:2:p:494-503

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Web page: http://www.elsevier.com/locate/jeconom

Related research

Keywords: Lock-in; Unobserved preference; Panel data; Discrete choice; Fixed effects; Random effects;

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References

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  11. Bo E. Honoré & Ekaterini Kyriazidou, 2000. "Panel Data Discrete Choice Models with Lagged Dependent Variables," Econometrica, Econometric Society, vol. 68(4), pages 839-874, July.
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