Lock-in and unobserved preferences in server operating systems: A case of Linux vs. Windows

Seung Hyun Hong, Leonardo Rezende

Research output: Contribution to journalArticlepeer-review


This paper investigates to what extent the persistence of Microsoft Windows in the market for server operating systems is due to lock-in or unobserved preferences. While the hypothesis of lock-in plays an important role in the antitrust policy debate for the operating systems market, it has not been extensively documented empirically. To account for unobserved preferences, we use a panel data identification approach based on time-variant group fixed effects, and estimate the dynamic discrete choice panel data model developed by Arellano and Carrasco (2003). Using detailed establishment-level data, we find that once we account for unobserved preferences, the estimated magnitudes of lock-in are considerably smaller than those from the conventional approaches, suggesting that unobserved preferences play a major role in the persistence of Windows. Further robustness checks are consistent with our findings.

Original languageEnglish (US)
Pages (from-to)494-503
Number of pages10
JournalJournal of Econometrics
Issue number2
StatePublished - Apr 2012


  • Discrete choice
  • Fixed effects
  • Lock-in
  • Panel data
  • Random effects
  • Unobserved preference

ASJC Scopus subject areas

  • Economics and Econometrics


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