Estimating the Lock-in Effects of Switching Costs from Firm-Level Data

Arbeitspapier

This paper proposes a simple method for estimating the lock-in effects of switching costs from firm-level data. We compare the behavior of already contracted consumers to the behavior of new consumers as the latter can serve as contrafactual to the former. In panel regressions on firms' incoming and quitting consumers, we look at the differential response to price changes and identify the lock-in effect of switching costs from the difference between the two. We illustrate our method by analyzing the Hungarian personal loan market and find strong lock-in effects.

Object Details

• ISBN: 978-615-5024-39-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IEHAS Discussion Papers ; No. MT-DP - 2011/8

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Consumer Economics: Empirical Analysis ; Oligopoly and Other Imperfect Markets
• Subject: switching costs ; lock-in ; panel data ; Wechselverhalten ; Konsumentenverhalten ; Panel ; Kreditgeschäft ; Ungarn

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kézdi, Gábor ; Csorba, Gergely
• Event: Veröffentlichung
• (who): Hungarian Academy of Sciences, Institute of Economics
• (where): Budapest
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/108218
• Last update: 10.03.2025, 11:43 AM CET