The cost of switching Internet providers in the broadband industry, or why ADSL has diffused faster than other innovative technologies: Evidence from the French case
The innovative broadband Internet industry is characterised by inertia phenomena in terms of technology choice, as well as selection of Internet service providers (ISPs). Within the set of firms providing Internet, very often in Europe the incumbent operator has the lion's share of end-customers and supplies the dominant technology. Focusing on the French case, this paper shows that although inertia on the supply side (partly due to the regulation process in itself), helps to explain the technology mix reached to date, a more complete picture of the inertia can be obtained when we consider the existence of costs faced by customers when switching between ISPs. We calculate these so-called “switching costs”. The closing section of this paper derives several implications in terms of policy.
|Date of creation:||2008|
|Date of revision:|
|Publication status:||Published, Research Policy, 2008, 37, 4, 706-719|
|Note:||View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00203512/en/|
|Contact details of provider:|| Web page: http://hal.archives-ouvertes.fr/ |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Economides, Nicholas, 1996.
"The economics of networks,"
International Journal of Industrial Organization,
Elsevier, vol. 14(6), pages 673-699, October.
- Greenstein, Shane M, 1997. "Lock-in and the Costs of Switching Mainframe Computer Vendors: What Do Buyers See?," Industrial and Corporate Change, Oxford University Press, vol. 6(2), pages 247-73, March.
- Metcalfe, J S, 1995. "Technology Systems and Technology Policy in an Evolutionary Framework," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 25-46, February.
- Shy, Oz, 2002. "A quick-and-easy method for estimating switching costs," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 71-87, January.
- Downes, Tom & Greenstein, Shane, 2002. "Universal access and local internet markets in the US," Research Policy, Elsevier, vol. 31(7), pages 1035-1052, September.
- Alleman, James & Rappoport, Paul, 2005. "Regulatory Failure: Time for a New Policy Paradigm," MPRA Paper 2517, University Library of Munich, Germany.
- Yongmin Chen, 1997. "Paying Customers to Switch," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 877-897, December.
- Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
- Suarez, Fernando F., 2004. "Battles for technological dominance: an integrative framework," Research Policy, Elsevier, vol. 33(2), pages 271-286, March.
- Steven Klepper, 2002. "Firm Survival and the Evolution of Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 37-61, Spring.
- Nelson, Richard R. & Nelson, Katherine, 2002. "Technology, institutions, and innovation systems," Research Policy, Elsevier, vol. 31(2), pages 265-272, February.
- Augereau, Angelique & Greenstein, Shane, 2001. "The need for speed in emerging communications markets: upgrades to advanced technology at Internet Service Providers," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1085-1102, July.
- Angelique Augereau & Shane Greenstein & Marc Rysman, 2006. "Coordination versus differentiation in a standards war: 56K modems," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 887-909, December.
- Klepper, Steven & Simons, Kenneth L., 2005. "Industry shakeouts and technological change," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 23-43, February.
- Fagerberg, Jan & Verspagen, Bart, 2002.
"Technology-gaps, innovation-diffusion and transformation: an evolutionary interpretation,"
Elsevier, vol. 31(8-9), pages 1291-1304, December.
- Jan Fagerberg & Bart Verspagen, 2001. "Technology-Gaps, Innovation-Diffusion And Transformation: An Evolutionary Interpretation," Working Papers 11, Centre for Technology, Innovation and Culture, University of Oslo.
- Green, Richard, 2000. "Can Competition Replace Regulation for Small Utility Customers?," CEPR Discussion Papers 2406, C.E.P.R. Discussion Papers.
- Freeman, Chris, 2002. "Continental, national and sub-national innovation systems--complementarity and economic growth," Research Policy, Elsevier, vol. 31(2), pages 191-211, February.
- Klepper, Steven, 1997. "Industry Life Cycles," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 145-81.
- Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
- Joseph Farrell & Carl Shapiro, 1988.
"Dynamic Competition with Switching Costs,"
RAND Journal of Economics,
The RAND Corporation, vol. 19(1), pages 123-137, Spring.
- Farrell, Joseph & Shapiro, Carl, 1988. "Dynamic Competition with Switching Costs," Department of Economics, Working Paper Series qt1h02g9q4, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Joseph Farrell and Carl Shapiro., 1988. "Dynamic Competition with Switching Costs," Economics Working Papers 8865, University of California at Berkeley.
- David Dranove & Neil Gandal, 2003. "The Dvd-vs.-Divx Standard War: Empirical Evidence of Network Effects and Preannouncement Effects," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 363-386, 09.
- S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
- Shelanski, Howard A., 2005. "Inter-Modal Competition and Telecommunications Policy in the United States," MPRA Paper 2513, University Library of Munich, Germany.
- Lundvall, Bengt-Ake & Johnson, Bjorn & Andersen, Esben Sloth & Dalum, Bent, 2002. "National systems of production, innovation and competence building," Research Policy, Elsevier, vol. 31(2), pages 213-231, February.
- Beggs, Alan, 1989. "A Note on Switching Costs and Technology Choice," Journal of Industrial Economics, Wiley Blackwell, vol. 37(4), pages 437-40, June.
- B. Douglas Bernheim & Michael D. Whinston, 1985. "Common Marketing Agency as a Device for Facilitating Collusion," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 269-281, Summer.
- Pavitt, K, 2001. "Public Policies to Support Basic Research: What Can the Rest of the World Learn from US Theory and Practice? (And What They Should Not Learn)," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 761-79, September.
- Klemperer, Paul, 1995. "Competition When Consumers Have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 515-39, October.
- Agarwal, Rajshree & Gort, Michael, 1996. "The Evolution of Markets and Entry, Exit and Survival of Firms," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 489-98, August.
When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00203512. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.