The Impact of Mobile Data Cost on Consumer Price Sensitivity: A Study of a Hotel Booking App

The rapid advancement of mobile internet technologies, such as 4G and 5 G, has greatly enhanced the accessibility and convenience of mobile shopping. However, along with these benefits, mobile data usage has introduced a novel form of search cost in consumers’ purchasing decisions compared with Wi-Fi. This arises from the perception that mobile data are more costly because of additional charges incurred when exceeding the fixed data quota, which contributes to the increase of mental cost during the search process. To examine the influence of mobile data cost on consumer price sensitivity, we conduct empirical research utilizing hotel search data obtained from a prominent hotel booking app. Our findings reveal that consumers exhibit approximately twice the level of price sensitivity when utilizing mobile data instead of Wi-Fi, resulting in an average US$17 less in revenue per hotel booking. To assess the causal relations between mobile data cost and consumer price sensitivity, we utilize an approach similar to difference-in-differences and observe that this impact is more pronounced when consumers book hotels at the end of the month (versus the beginning of the month). We further find that consumer search effort decreases when using mobile data (versus Wi-Fi) across decision stages of the search process, supporting the mechanism that mobile data cost drives consumers into the satisficing rather than maximizing search mode. Our research offers practical implications for businesses operating in mobile shopping environments and contributes to policy development in this field.