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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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Cited by:
  1. 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 2008-04, Observatoire Francais des Conjonctures Economiques (OFCE).
  2. Antonelli, Cristiano & Krafft, Jackie & Quatraro, Francesco, 2010. "Recombinant knowledge and growth: The case of ICTs," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 50-69, March.
  3. 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.
  4. Jackie Krafft & Francesco Quatraro & Pier-Paolo Saviotti, 2008. "Evolution of the knowledge base in knowledge intensive sectors," Working Papers hal-00264261, HAL.

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