Give an Example of a Company Whose Switching Costs Are

question 60

Short Answer

Give an example of a company whose switching costs are too high, effectively keeping its customer captive. How is this company using technology to maintain high switching costs?

---

Definitions:

Lessee's Cost

Lessee's cost involves the expenses borne by a lessee, including lease payments, maintenance, and other costs related to the leased asset.

Tax-oriented Lease

A lease structured in a way that allows the lessor to claim tax benefits, such as depreciation deductions and tax credits, which are then typically passed on to the lessee in the form of lower lease payments.

Financial Lease

A lease agreement in which the lessee assumes both the risks and rewards of asset ownership, often with an option to purchase the asset at the end of the lease term.

Operating Lease

A lease agreement that allows the use of an asset but does not convey rights of ownership of the asset.