Enforced compatibility and control of switching costs in markets with network externalities: an experiment Cover Image

Enforced compatibility and control of switching costs in markets with network externalities: an experiment
Enforced compatibility and control of switching costs in markets with network externalities: an experiment

Author(s): Tomasz Kopczewski, Michał Krawczyk, Przemysław Kusztelak
Subject(s): Economy, Business Economy / Management
Published by: Uniwersytet Warszawski - Wydział Nauk Ekonomicznych
Keywords: network externalities; lock-in; technology standards

Summary/Abstract: We experimentally investigate two competition policy measures relevant for markets with network externalities: mandating technological compatibility and lowering the cost of switching between providers. We do so in a virtual market with the roles of both sellers and buyers being played by student subjects. We find only limited support for usefulness of the analyzed measures: our treatment manipulations have no effect on sellers’ pricing strategies. They do, however, reduce individual lock-in, helping the buyers to obtain the currently cheaper variant and thus increase customers’ welfare.

  • Issue Year: 2013
  • Issue No: 35
  • Page Range: 45-64
  • Page Count: 20
  • Language: English