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Non-User Utility and Market Power: The Case of Smartphones

Author

Listed:
  • Leonardo Bursztyn

    (University of Chicago & NBER)

  • Rafael Jiménez-Durán

    (Bocconi University, IGIER & Chicago Booth Stigler Center)

  • Aaron Leonard

    (University of Chicago)

  • Filip Milojević

    (University of Chicago)

  • Christopher Roth

    (University of Cologne, NHH, Max Planck Institute for Research on Collective Goods, IZA & CEPR)

Abstract

Firms can increase the demand for their products and consolidate their market power not only by increasing user utility but also by decreasing non-user utility. In this paper, we examine this mechanism by considering the case of smartphones. In particular, Apple has faced criticism for allegedly degrading the Android user experience by making messages to Android devices appear as green bubbles on iPhones—a salient signal often perceived as reflecting a lower socioeconomic status. Using samples of US college students, we show that green bubbles are widely stigmatized and that a majority of both iPhone and Android users would prefer green bubbles to no longer exist. We then conduct an incentivized deactivation experiment, revealing that iPhone users have a significant willingness to pay to prevent their messages from appearing as green bubbles on other iPhones. Next, we examine the market implications of non-user utility and find that respondents are substantially more likely to choose an Android over an iPhone when green bubbles are removed. We conclude by presenting case studies that illustrate how companies use product features to reduce non-user utility in various markets.

Suggested Citation

  • Leonardo Bursztyn & Rafael Jiménez-Durán & Aaron Leonard & Filip Milojević & Christopher Roth, 2025. "Non-User Utility and Market Power: The Case of Smartphones," ECONtribute Discussion Papers Series 360, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:360
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_360_2025.pdf
    File Function: First version, 2025
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    References listed on IDEAS

    as
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    2. Ingar Haaland & Christopher Roth & Stefanie Stantcheva & Johannes Wohlfart, 2024. "Measuring What Is Top of Mind," ECONtribute Discussion Papers Series 298, University of Bonn and University of Cologne, Germany.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Non-user utility; Stigma; Market Power; Consumer Welfare; Anti-trust.;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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