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Switching Costs in Mobile Telephony: Evidence for the Mexican Case

Author

Listed:
  • Giovanni Tapia Lezama

    (Coordinador especialista “B”, Subgerencia de Análisis de Iniciativas Económicas y Normativas, Petróleos Mexicanos Corporativo (Pemex). México, D.F. Mexico.)

Abstract

This article identifies and calculates switching costs and network effects between the two leading mobile operators in Mexico: Telcel and Movistar. In order to do this, the model created by Suleymanova & Wey (2008) was calibrated, and additional evidence is presented. The study finds that switching costs are more relevant than network effects, which generates a fat-cat effect. These costs have declined over time but remain high, inhibiting competition. The costs are asymmetrical, as Telcel users face higher costs. The relevant switching costs are the ones derived from search and comparison of information, and those created by the network effects through tariffs.

Suggested Citation

  • Giovanni Tapia Lezama, 2013. "Switching Costs in Mobile Telephony: Evidence for the Mexican Case," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 207-233, January-J.
    • Handle: RePEc:emc:ecomex:v:22:y:2013:i:1:p:207-233
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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/XXII-1/06_EM_Costos_de_traspaso_(207-233).pdf
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    More about this item

    Keywords

    switching costs; empirical estimate of switching costs; competition; mobile telephony market.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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