Essays on the impacts of consumer switching costs on e-commerce business models and services

In this thesis we identify and obtain structural results from two different issues that are motivated by new electronic commerce services and technologies. We study all problems from the consumer switching cost perspective. Analyzing protection strategies for online software distribution is the subject of the first study. We consider a market that has two software producers, one of which protects its software while the other does not. Economic models are used to analyze different scenarios, and the result shows that when the software protection environment is fast improving, software firms should not protect their software products, since piracy can help them to lock in customers now and make higher profit in the near future. However, if the protection environment does not improve enough or even gets worse, firms that do not protect their software will not be able to benefit from the customers locked-in by pirate software, and they will be better-off protecting their software products. The second part of the thesis addresses a new mobile electronic commerce model called Bar Code Shopping (BCS). By using BCS, a consumer can get price information from his or her mobile device by just scanning the Universal Product Code (UPC) on the product. Economic models are presented to analyze market segmentation and store's optimal pricing strategies when consumer switching costs are present. We are able to derive the conditions under which the Price Information Broker (PIB) has incentives to introduce the BCS service, stores have incentives to adopt the service, and consumers are willing to pay for the service.