Estimating consumer lock-in effects from firm-level data
AbstractThis paper proposes a practical method for estimating consumer lock-in effects from firm-level data. The method compares the behavior of already contracted consumers to the behavior of new consumers, the latter serving as a counterfactual to the former. In panel regressions on firms' incoming and quitting consumers, we look at the differential response to price changes and identify the lock-in effect from the difference between the two. We discuss the potential econometric issues and measurement problems and offer solutions to them. We illustrate our method by analyzing the market for personal loans in Hungary and find strong lock-in effects.
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Bibliographic InfoPaper provided by Department of Economics, Central European University in its series CEU Working Papers with number 2012_17.
Date of creation: 19 Oct 2012
Date of revision: 19 Oct 2012
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-COM-2012-11-17 (Industrial Competition)
- NEP-MKT-2012-11-17 (Marketing)
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