The Existence of State Dependence and Switching Costs in the Transition From MySpace to Facebook

Author

Taryn M. Ohashi, Scripps CollegeFollow

Graduation Year

Spring 2013

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Latika Chaudhary

Reader 2

Roberto Pedace

Rights Information

© 2013 Taryn M. Ohashi

Abstract

In this paper, I examine the existence and roles of state dependence and switching costs in the mass transition from MySpace to Facebook during the 2007-2008 time period. Using a dataset that compiles individual browsing behavior and a discrete multinomial logit model, I find precise, yet extremely small amounts of state dependence for users of only MySpace, of only Facebook, and users of both MySpace and Facebook. Positive state dependence directly implies the existence of switching costs for each firm. While there is an abundance of literature regarding switching costs in the brick and mortar setting with tangible products and services, my work extends similar analysis to the relatively new online, social networking industry by studying consumer usage trends of the two networking powerhouses: MySpace and Facebook.

Recommended Citation

Ohashi, Taryn M., "The Existence of State Dependence and Switching Costs in the Transition From MySpace to Facebook" (2013). Scripps Senior Theses. 246.
https://scholarship.claremont.edu/scripps_theses/246