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To root or not to root? The economics of jailbreak

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  • Chao, Hong
  • Ho, Chun-Yu
  • Leung, Tin Cheuk
  • Ng, Travis

Abstract

We construct a structural model that allows us to jointly estimate the demand for smartphones and paid apps using a Bayesian approach. Our data comes from more than 500 college students in Hong Kong and Shanghai. We find that the utility cost rather than the upfront monetary cost of jailbreaking smartphones determines its prevalence. Users mainly jailbreak smartphones to use paid apps for free, a reason more important among Android users than iPhone users. Paid apps contribute the lion’s share of the profits (between 66% and 59%) for both the Android and iPhone. Strictly prohibiting jailbreaking would decrease the aggregate market share of smartphones in the cell phone market. Apple, however, would sell even more iPhones at the expense of Android smartphones.

Suggested Citation

  • Chao, Hong & Ho, Chun-Yu & Leung, Tin Cheuk & Ng, Travis, 2017. "To root or not to root? The economics of jailbreak," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 481-497.
    • Handle: RePEc:eee:jcecon:v:45:y:2017:i:3:p:481-497
    DOI: 10.1016/j.jce.2016.08.002
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    Cited by:

    1. Jin-Hyuk Kim & Tin Cheuk Leung, 2013. "Quantifying the Impacts of Digital Rights Management and E-Book Pricing on the E-Book Reader Market," Working Papers 13-03, NET Institute.

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    More about this item

    Keywords

    Jailbreak; Demand estimation; Smartphones; App demand;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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