Lock-in and unobserved preferences in server operating systems: A case of Linux vs. Windows |
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Authors: | Seung-Hyun Hong Leonardo Rezende |
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Institution: | 1. Department of Economics, University of Illinois, United States;2. Department of Economics, PUC-Rio, Brazil |
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Abstract: | This paper investigates to what extent the persistence of Microsoft Windows in the market for server operating systems is due to lock-in or unobserved preferences. While the hypothesis of lock-in plays an important role in the antitrust policy debate for the operating systems market, it has not been extensively documented empirically. To account for unobserved preferences, we use a panel data identification approach based on time-variant group fixed effects, and estimate the dynamic discrete choice panel data model developed by Arellano and Carrasco (2003). Using detailed establishment-level data, we find that once we account for unobserved preferences, the estimated magnitudes of lock-in are considerably smaller than those from the conventional approaches, suggesting that unobserved preferences play a major role in the persistence of Windows. Further robustness checks are consistent with our findings. |
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Keywords: | C23 L15 L17 L86 |
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