The effect of shortening lock-in periods in telecommunication services

Baojiang Yang; Miguel Godinho de Matos; Pedro Ferreira

doi:10.25300/MISQ/2020/14839

The effect of shortening lock-in periods in telecommunication services

Baojiang Yang, Miguel Godinho de Matos, Pedro Ferreira

Resultado de pesquisa › revisão de pares

4 Citações (Scopus)

Resumo

In this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.

Idioma original	English
Páginas (de-até)	1391-1409
Número de páginas	12
Revista	Management information systems quarterly
Volume	44
Número de emissão	3
DOIs	https://doi.org/10.25300/MISQ/2020/14839
Estado da publicação	Publicado - set. 2020

Acesso ao documento

10.25300/MISQ/2020/14839

http://hdl.handle.net/10400.14/32251Licença: Unspecified

Outros arquivos e links

Link to publication in Scopus

???embargo-document???

20605838
Final published version, 3,47 MB
Licença: Unspecified
???embargo_end???: 1/09/25

CUBE: Católica Lisbon Research Unit in Business and Economics
Machado, F. (PI), Aranda, A. M. (Investigador), Costa, A. I. D. A. (Investigador), Martins, A. P. (Investigador), Bernard, A. (Investigador), Fidalgo, A. (Investigador), Reis, C. (Investigador), Abecassis-Moedas, C. (Investigador), Santos, C. (Investigador), Tran, D. (Investigador), Fernandes, D. (Investigador), Bonfim, D. (Investigador), Schliephake, E. (Investigador), Kalogirou, F. (Investigador), Reis, F. (Investigador), Santos, F. (Investigador), Machado, F. (Investigador), Sguera, F. (Investigador), Cerqueiro, G. (Investigador), Reis, H. (Investigador), Barreto, I. (Investigador), Silva, J. (Investigador), Salvado, J. C. (Investigador), Neves, J. C. D. (Investigador), Gijsbrechts, J. (Investigador), Stahl, J. (Investigador), Guedes, J. C. (Investigador), Faias, J. (Investigador), Wagner, L. (Investigador), Correia, I. (Investigador), Saldanha, M. F. (Investigador), Fontes, J. C. (Investigador), Modesto, L. (Investigador), Meira, M. (Investigador), Matos, M. G. D. (Investigador), Gouveia, M. (Investigador), Kozeniauskas, N. (Investigador), Bertani, N. (Investigador), Couzoff, P. (Investigador), Barroso, P. (Investigador), Encarnação, P. (Investigador), Raposo, P. (Investigador), Teles, P. (Investigador), Bastos, W. (Investigador), Bohnsack, R. (Investigador), Vale, R. C. D. (Investigador), Ferreira, R. (Investigador), Lloyd-Braga, T. (Investigador), Ramus, T. (Investigador), Colaço, V. H. (Investigador), Cavicchini, A. (Investigador), Parada, P. (Investigador), Pieters, R. (Investigador), Pinto, F. A. G. D. L. S. (Investigador), Colaço, V. H. (Investigador) & Venter, Z. (Investigador)
1/01/20 → 31/12/25
Projeto
CEEC Institucional 2018 - CUBE - Docente 2
Matos, M. G. D. (PI)
24/07/19 → 23/07/25
Projeto

Citação

@article{b4f6cc79316c4112af16ddc361c6457f,

title = "The effect of shortening lock-in periods in telecommunication services",

abstract = "In this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.",

keywords = "Lock-in periods, Switching costs, Telecommunications, Multinomial logit",

author = "Baojiang Yang and Matos, {Miguel Godinho de} and Pedro Ferreira",

note = "Funding Information: Miguel Godinho de Matos and Baojiang Yang were supported by the Portuguese Foundation for Science and Technology (Grants UID/GES/00407/2013 and PTDC/EGE-OGE/27968/2017). Baojiang Yang was supported by the Carnegie Mellon Portugal Program through the Portuguese Foundation for Science and Technology through Grant SFRH/BD/52611/2014. The authors thank Ant{\'o}nio Moreira for excellent research assistantship. The authors thank Rodrigo Belo and Filipa Reis for valuable comments on earlier versions of this paper; the industry partner for their support; and the organizers of and participants in Workshop on the Economics of Network Industries in Paris and Workshop on Information Technologies and Systems in Dallas. Publisher Copyright: {\textcopyright} 2020 University of Minnesota. All rights reserved. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.",

year = "2020",

month = sep,

doi = "10.25300/MISQ/2020/14839",

language = "English",

volume = "44",

pages = "1391--1409",

journal = "Management information systems quarterly",

issn = "0276-7783",

publisher = "Management Information Systems Research Center",

number = "3",

}

TY - JOUR

T1 - The effect of shortening lock-in periods in telecommunication services

AU - Yang, Baojiang

AU - Matos, Miguel Godinho de

AU - Ferreira, Pedro

N1 - Funding Information: Miguel Godinho de Matos and Baojiang Yang were supported by the Portuguese Foundation for Science and Technology (Grants UID/GES/00407/2013 and PTDC/EGE-OGE/27968/2017). Baojiang Yang was supported by the Carnegie Mellon Portugal Program through the Portuguese Foundation for Science and Technology through Grant SFRH/BD/52611/2014. The authors thank António Moreira for excellent research assistantship. The authors thank Rodrigo Belo and Filipa Reis for valuable comments on earlier versions of this paper; the industry partner for their support; and the organizers of and participants in Workshop on the Economics of Network Industries in Paris and Workshop on Information Technologies and Systems in Dallas. Publisher Copyright: © 2020 University of Minnesota. All rights reserved. Copyright: Copyright 2021 Elsevier B.V., All rights reserved.

PY - 2020/9

Y1 - 2020/9

N2 - In this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.

AB - In this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.

KW - Lock-in periods

KW - Switching costs

KW - Telecommunications

KW - Multinomial logit

UR - http://www.scopus.com/inward/record.url?scp=85100330351&partnerID=8YFLogxK

U2 - 10.25300/MISQ/2020/14839

DO - 10.25300/MISQ/2020/14839

M3 - Article

SN - 0276-7783

VL - 44

SP - 1391

EP - 1409

JO - Management information systems quarterly

JF - Management information systems quarterly

IS - 3

ER -

The effect of shortening lock-in periods in telecommunication services

Resumo

Acesso ao documento

Outros arquivos e links

???embargo-document???

Impressão digital

Projetos

CUBE: Católica Lisbon Research Unit in Business and Economics

CEEC Institucional 2018 - CUBE - Docente 2

Citação