Changes in consumers' behavior when a vertically integrated service is separated —The case of Japanese mobile phone services—

In this paper, I empirically examine the consumer behavior change in the case that the current vertically integrated Japanese mobile phone market was separated by employing the stated preference survey. As a hypothetical vertically separated situation, I assumed the introduction of contents compatibility and handsets compatibility among different mobile phone carriers. My analysis also assumed the introduction of mail address portability. My estimation results yield the following implications: (1) handset compatibility, contents compatibility, and mail address portability reduces consumer's switching costs, and (2) current contents incompatibility is offsetting the network quality difference among carriers.