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

1 Citação (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	MIS Quarterly: Management Information Systems
Volume	44
Número de emissão	3
DOIs	https://doi.org/10.25300/MISQ/2020/14839
Estado da publicação	Publicado - set 2020

ODS da ONU

Este resultado contribui para o(s) seguinte(s) Objetivo(s) de Desenvolvimento Sustentável

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10.25300/MISQ/2020/14839

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

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2 Ativos

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

Citação

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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",

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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.

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KW - Multinomial logit

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The effect of shortening lock-in periods in telecommunication services

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Projetos

CUBE: Católica Lisbon Research Unit in Business and Economics

CEEC Institucional 2018 - CUBE - MGM

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