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The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies"

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Abstract

The paper focuses on the innovative French broadband Internet industry that is characterised by inertia phenomena in terms of technology choice. We argue that although inertia on the supply side helps to explain the faster diffusion of ADSL, a more complete picture can be obtained when we consider the existence of costs faced by customers when switching between Internet Service Providers (ISPs). We calculate these so-called “switching costs” and conclude that they act as a barrier to customers' mobility, thus bringing about a dominance of the technology supplied by the largest firm.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2006-16.

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Date of creation: 2006
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Handle: RePEc:fce:doctra:0616

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  15. Jackie Krafft, 1999. "Introduction," Post-Print hal-00212290, HAL.
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  17. Shy, Oz, 2002. "A quick-and-easy method for estimating switching costs," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 71-87, January.
  18. Augereau, Angelique & Greenstein, Shane, 2001. "The need for speed in emerging communications markets: upgrades to advanced technology at Internet Service Providers," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1085-1102, July.
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Cited by:
  1. Jackie Krafft & Francesco Quatraro & Pier-Paolo Saviotti, 2008. "Evolution of the knowledge base in knowledge intensive sectors," Working Papers hal-00264261, HAL.
  2. Salies, Evens, 2005. "A Measure of Switching Costs in the GB Electricity Retail Market," MPRA Paper 28255, University Library of Munich, Germany, revised Apr 2007.
  3. Jackie Krafft & Evens Salies, 2008. "Why and how should innovative industries with high consumer switching costs be re-regulated?," Documents de Travail de l'OFCE 2008-13, Observatoire Francais des Conjonctures Economiques (OFCE).
  4. Andersen Birgitte & Rossi Federica, 2010. "Recombinant Knowledge and Growth: The Case Of Icts," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201001, University of Turin.

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