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Does Bundling Decrease the Probability of Switching Telecommunications Service Providers?

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  • Stephanie Lee

    (Stanford University)

Abstract

I examine whether bundling of telecommunications services makes individuals less likely to switch their service provider because of increased switching costs. Using a detailed survey dataset from the Korea Information Society Development Institute (KISDI), I find that Internet subscribers who previously bundled are less likely to switch their Internet service provider than are those who did not bundle. The results are robust to correction for the potential selection problem through the use of an endogenous treatment model. The finding that bundling reduces the probability of switching service providers and locks-in existing users can have important implications for market competitiveness and consumer welfare.

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  • Stephanie Lee, 2017. "Does Bundling Decrease the Probability of Switching Telecommunications Service Providers?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 303-322, May.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:3:d:10.1007_s11151-016-9532-1
    DOI: 10.1007/s11151-016-9532-1
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    Cited by:

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    2. Calzada, Joan & García-Mariñoso, Begoña & Suárez, David, 2023. "Do telecommunications prices depend on consumer engagement?," Information Economics and Policy, Elsevier, vol. 62(C).
    3. Yu, Eun & Jung, Jaemin, 2018. "Towards Quadruple-Play Service: Both Individual and Household Level Analyses on Mobile Bundle," 29th European Regional ITS Conference, Trento 2018 184972, International Telecommunications Society (ITS).
    4. García-Mariñoso, Begoña & Suárez, David, 2019. "Switching mobile operators: Evidence about consumers’ behavior from a longitudinal survey," Telecommunications Policy, Elsevier, vol. 43(5), pages 426-433.
    5. Kim, Moon-Koo & Park, Myeong-Cheol & Lee, Duk Hee & Park, Jong-Hyun, 2017. "Determinants of the subscription to bundled services and their effect on customer retention in the Korean communications sector," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168501, International Telecommunications Society (ITS).
    6. Silva, João Marcos Soares da & Lima, Ricardo Carvalho de Andrade, 2022. "Is Netflix a threat to the cable TV industry? Evidence from Brazil," Telecommunications Policy, Elsevier, vol. 46(3).
    7. Kim, Moon-Koo & Park, Myeong-Cheol & Lee, Duk Hee & Park, Jong-Hyun, 2019. "Determinants of subscriptions to communications service bundles and their effects on customer retention in Korea," Telecommunications Policy, Elsevier, vol. 43(9).

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