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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

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  • Jackie Krafft

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Evens Salies

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

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.

Suggested Citation

  • Jackie Krafft & Evens Salies, 2008. "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," Sciences Po Economics Publications (main) hal-00203512, HAL.
    • Handle: RePEc:hal:spmain:hal-00203512
    Note: View the original document on HAL open archive server: https://hal.science/hal-00203512v1
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    1. repec:spo:wpmain:info:hdl:2441/53r60a8s3kup1vc9ji1hni539 is not listed on IDEAS
    2. Antonelli, Cristiano & Krafft, Jackie & Quatraro, Francesco, 2010. "Recombinant knowledge and growth: The case of ICTs," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 50-69, March.
    3. Evens Salies, 2012. "Asymmetric switching costs can improve the predictive power of shy's model," Sciences Po Economics Publications (main) hal-01070341, HAL.
    4. Jackie Krafft & Francesco Quatraro & Pier Paolo Saviotti, 2014. "The Dynamics of Knowledge-intensive Sectors' Knowledge Base: Evidence from Biotechnology and Telecommunications," Industry and Innovation, Taylor & Francis Journals, vol. 21(3), pages 215-242, April.
    5. Werner Hölzl, 2015. "Sunk costs and the speed of market selection," Journal of Evolutionary Economics, Springer, vol. 25(2), pages 323-344, April.
    6. Jackie Krafft & Francesco Quatraro & Pier-Paolo Saviotti, 2008. "Evolution of the knowledge base in knowledge intensive sectors," Working Papers hal-00264261, HAL.

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