Does Bundling Decrease the Probability of Switching Telecommunications Service Providers?

Does Bundling Decrease the Probability of Switching Telecommunications Service Providers? I examine whether bundling of telecommunications services makes individuals less likely to switch their service provider because of increased switching costs. Using a detailed survey dataset from the Korea Information Society Development Institute (KISDI), I find that Internet subscribers who previously bundled are less likely to switch their Internet service provider than are those who did not bundle. The results are robust to correction for the potential selection problem through the use of an endogenous treatment model. The finding that bundling reduces the probability of switching service providers and locks-in existing users can have important implications for market competitiveness and consumer welfare. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Does Bundling Decrease the Probability of Switching Telecommunications Service Providers?

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Publisher
Springer US
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-016-9532-1
Publisher site
See Article on Publisher Site

Abstract

I examine whether bundling of telecommunications services makes individuals less likely to switch their service provider because of increased switching costs. Using a detailed survey dataset from the Korea Information Society Development Institute (KISDI), I find that Internet subscribers who previously bundled are less likely to switch their Internet service provider than are those who did not bundle. The results are robust to correction for the potential selection problem through the use of an endogenous treatment model. The finding that bundling reduces the probability of switching service providers and locks-in existing users can have important implications for market competitiveness and consumer welfare.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jul 22, 2016

References

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