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Enforced compatibility and control of switching costs in markets with network externalities: an experiment

Author

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  • Tomasz Kopczewski
  • Michał Krawczyk
  • Przemysław Kusztelak

Abstract

We experimentally investigate two competition policy measures relevant for markets with network externalities: mandating technological compatibility and lowering the cost of switching between providers. We do so in a virtual market with the roles of both sellers and buyers being played by student subjects. We find only limited support for usefulness of the analyzed measures: our treatment manipulations have no effect on sellers’ pricing strategies. They do, however, reduce individual lock-in, helping the buyers to obtain the currently cheaper variant and thus increase customers’ welfare.

Suggested Citation

  • Tomasz Kopczewski & Michał Krawczyk & Przemysław Kusztelak, 2013. "Enforced compatibility and control of switching costs in markets with network externalities: an experiment," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 35.
    • Handle: RePEc:eko:ekoeko:35_45
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    File URL: http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/377
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    References listed on IDEAS

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