tag:blogger.com,1999:blog-6525425772304841899.post4845212643588714539..comments2023-12-17T18:00:38.652-08:00Comments on Econ Tricks: Why Do Online Firms Let Customers Get Away?Greg Finleyhttp://www.blogger.com/profile/06005875920306936097noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6525425772304841899.post-35765024854400664782010-02-01T18:59:48.953-08:002010-02-01T18:59:48.953-08:00In the era of free online services, I wonder if th...In the era of free online services, I wonder if the analogy with paid services that employ lock-in techniques is apt. I may purchase a cell phone and accompanying plan based on the features/price at the outset, but once I'm in that plan the company can employ strong lock-in techniques to keep me there for the duration of the contract, e.g., cancellation fees. If yours and competing services are free, however, "lock-in" becomes more of a feature-constrained idea, i.e., "I'll stick with Google Mail because they offer the most online storage space and a robust set of customization options."Joshhttp://pillarist.orgnoreply@blogger.comtag:blogger.com,1999:blog-6525425772304841899.post-42593622803591378092010-01-29T10:51:58.157-08:002010-01-29T10:51:58.157-08:00Yeah, the gold provides a visible constraint. An ...Yeah, the gold provides a visible constraint. An interesting question would be what would happen if banks just made their own fiat currency, not redeemable in anything--would that ultimately produce the same outcome? My instinct says yes, but I don't have any concrete reasoning behind it.Anonymoushttps://www.blogger.com/profile/16132674237614327721noreply@blogger.comtag:blogger.com,1999:blog-6525425772304841899.post-91360706752184414212010-01-29T08:54:23.616-08:002010-01-29T08:54:23.616-08:00I see your point about the banks, and it's an ...I see your point about the banks, and it's an interesting example, though absent with the online firms is the idea of redeeming anything of arbitrary value (in your example, paper) for something of common value (gold).Greg Finleyhttps://www.blogger.com/profile/06005875920306936097noreply@blogger.comtag:blogger.com,1999:blog-6525425772304841899.post-50813082431794665362010-01-29T08:13:47.019-08:002010-01-29T08:13:47.019-08:00On your last point: the vast majority will never c...On your last point: the vast majority will never care, but in the end it's the <i>marginal</i> users that services must compete for, as with everything.<br /><br />An interesting related story that this always reminds me of is George Selgin describing free banking in Scotland (back in the 18th and 19th centuries). In that system, each bank printed its own currency that could be exchanged for a certain amount of gold.<br /><br />To begin with the big banks wouldn't accept the currency of the newer, smaller banks because they wanted to shut them out of the competition. But then they found that the smaller banks were accepting <i>their</i> notes, and then bringing them in to redeem for the big banks' gold, while not accepting the little banks' currency meant that they couldn't get any gold back. So eventually they were forced to accept the smaller banks' currency too.<br /><br />Basically, the big banks wanted to lock everyone into their own currency, but the constraints of the system made it impossible. I'm not sure if I explained it well, but the ability to move blogs around to different platforms always makes me think of that.Anonymoushttps://www.blogger.com/profile/16132674237614327721noreply@blogger.com