Lock-in (consumer)

Sometimes also referred to as “vendor lock-in” it refers to the economic phenomenon that results when consumers or commercial users of a product or service are faced with high costs of switching (“switching costs”) to an alternative technology. Lock-in may occur when the consumer or user incurs an outlay of high fixed costs, such as purchasing a particular technology (e.g., game console) that is not interchangeable with similar competing technologies, or where an alternate technology would require discarding substantial assets. The existence of substantial target customer lock-in may be a factor recommending an acquisition; it may also be a factor that is considered adversely by competition and antitrust authorities in reviewing a merger as it suggests an ability to abuse a resulting dominant position. See Legacy Software.

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