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The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies

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  • Jackie Krafft

    () (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Evens Salies

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

Abstract

The paper focuses on the innovative French broadband Internet industry that is characterised by inertia phenomena in terms of technology choice. We argue that although inertia on the supply side helps to explain the faster diffusion of ADSL, a more complete picture can be obtained when we consider the existence of costs faced by customers when switching between Internet Service Providers (ISPs). We calculate these so-called "switching costs" and conclude that they act as a barrier to customers' mobility, thus bringing about a dominance of the technology supplied by the largest firm.

Suggested Citation

  • Jackie Krafft & Evens Salies, 2006. "The cost of switching Internet providers in the French broadband industry, or why ADSL has diffused faster than other innovative technologies," Working Papers hal-00972799, HAL.
  • Handle: RePEc:hal:wpaper:hal-00972799
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-00972799
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    Cited by:

    1. Jackie Krafft & Evens Salies, 2008. "Why and how should innovative industries with high consumer switching costs be re-regulated?," Documents de Travail de l'OFCE 2008-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Evens Salies, 2012. "Asymmetric switching costs can improve the predictive power of shy's model," Working Papers hal-01070341, HAL.
    3. 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.
    4. Jackie Krafft & Francesco Quatraro & Pier-Paolo Saviotti, 2008. "Evolution of the knowledge base in knowledge intensive sectors," Working Papers hal-00264261, HAL.
    5. Salies, Evens, 2005. "A Measure of Switching Costs in the GB Electricity Retail Market," MPRA Paper 28255, University Library of Munich, Germany, revised Apr 2007.

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    More about this item

    Keywords

    consumers' switching costs; technological inertia; evolution of industries;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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