The Effects Of Endogenous Switching Costs On Consumer Choice: A Case Study - Apple’s iPod and iTunes Music Store
Apple Computer's iPod and iTunes Music Store have taken the digital music industry by storm, but its general refusal to license or allow compatibility of its proprietary rights management has prompted lawsuits, attempts to hack the iPod's software by competitors, and even Congressional hearings on the matter. Seemingly, Apple has attempted to maximize long-run profits by gaining market market share early in the market's existence by establishing switching costs. However, a more intriguing paradox is that so many consumers are buying into the closed format. Are users forced into Apple's products once they have bought in? What long-run effects do switching costs have on the performance of the industry and what performance implications arise?
Date of Completion
Worthington, Scott, "The Effects Of Endogenous Switching Costs On Consumer Choice: A Case Study - Apple’s iPod and iTunes Music Store" (2005). Economics Theses. 4.