To root or not to root? The economics of jailbreak |
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| Institution: | 1. Shanghai Jiao Tong University, China;2. Wake Forest University, US;3. The Chinese University of Hong Kong, China;4. University at Albany, SUNY, USA;1. Department of Marketing, College of Business, University of Texas at Arlington, Arlington, TX 76019, United States;2. Information Systems and Operations Management, College of Business, University of Texas at Arlington, Arlington, TX 76019, United States;1. National Institute of Public Finance and Policy, New Delhi, India;2. Consulting Editor at Mint, HT Media, New Delhi, India;1. Emeritus Associate Professor of Economics, Department of Economics, University of Connecticut, 365 Fairfield Way, Storrs, CT 06269-1063, USA;2. Assistant Professor of Economics, Department of Economics and Human Rights Institute, University of Connecticut, IZA, CReAM, HiCN, & INSIDE, 365 Fairfield Way, Storrs, Storrs, CT 06269-1063, USA |
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| Abstract: | We construct a structural model that allows us to jointly estimate the demand for smartphones and paid apps using a Bayesian approach. Our data comes from more than 500 college students in Hong Kong and Shanghai. We find that the utility cost rather than the upfront monetary cost of jailbreaking smartphones determines its prevalence. Users mainly jailbreak smartphones to use paid apps for free, a reason more important among Android users than iPhone users. Paid apps contribute the lion’s share of the profits (between 66% and 59%) for both the Android and iPhone. Strictly prohibiting jailbreaking would decrease the aggregate market share of smartphones in the cell phone market. Apple, however, would sell even more iPhones at the expense of Android smartphones. |
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