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To Root or Not to Root? The Economics of Jailbreak

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  • Leung, Tin Cheuk
  • Ng, Travis
  • Ho, Chun-Yu
  • Chao, Hong

Abstract

We construct a structural model that allows us to jointly estimate the demand for smartphones and paid apps using a Bayesian approach. Our data comes from more than 500 college students in Hong Kong and Shanghai. We find that the moral cost rather than the monetary cost of jailbreaking smartphones determines its prevalence. Users mainly jailbreak smartphones to use paid apps for free, a reason more important among Android users than iPhone users. Paid apps contribute the lion's share of the profits (between 53% and 71%) for both the Android and iPhone. Strictly prohibiting jailbreaking would decrease the aggregate market share of smartphones in the cell phone market. Apple, however, would sell even more iPhones at the expense of Android smartphones.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 47409.

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Date of creation: 05 Jun 2013
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Handle: RePEc:pra:mprapa:47409

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Keywords: jailbreak; demand estimation; smartphones;

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  1. Rob, Rafael & Waldfogel, Joel, 2006. "Piracy on the High C's: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 49(1), pages 29-62, April.
  2. Yi Qian, 2008. "Impacts of Entry by Counterfeiters," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(4), pages 1577-1609, November.
  3. Tin Cheuk Leung, 2013. "What Is the True Loss Due to Piracy? Evidence from Microsoft Office in Hong Kong," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 1018-1029, July.
  4. Leung, Tin Cheuk, 2012. "Music Piracy: Bad for Record Sales but Good for the iPod?," MPRA Paper 45772, University Library of Munich, Germany.
  5. Liebowitz, Stan J, 2006. "File Sharing: Creative Destruction or Just Plain Destruction?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 49(1), pages 1-28, April.
  6. Michael Waterson & Chris Doyle, 2012. "Your Call: eBay and Demand for the iPhone 4☆," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(1), pages 141-152, February.
  7. Zentner, Alejandro, 2006. "Measuring the Effect of File Sharing on Music Purchases," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 49(1), pages 63-90, April.
  8. Aviv Nevo, 2000. "A Practitioner's Guide to Estimation of Random-Coefficients Logit Models of Demand," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 9(4), pages 513-548, December.
  9. Felix Oberholzer-Gee & Koleman Strumpf, 2007. "The Effect of File Sharing on Record Sales: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 115, pages 1-42.
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Cited by:
  1. Jin-Hyuk Kim & Tin Cheuk Leung, 2013. "Quantifying the Impacts of Digital Rights Management and E-Book Pricing on the E-Book Reader Market," Working Papers, NET Institute 13-03, NET Institute.

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