Heterogenous Switching Costs
31 Pages Posted: 2 Jun 2014
There are 2 versions of this paper
Heterogenous Switching Costs
CESifo Working Paper Series No. 4587
Number of pages: 28
Posted: 05 Feb 2014
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62
Date Written: February 2014
Abstract
We consider a simple two period model where consumers have different switching costs. Before the market opens, there was an incumbent who sold to all consumers. We identify the equilibrium both with Stackelberg and Bertrand competition and show how the presence of low switching cost consumers benefits the incumbent, despite the fact that it never sells to any of them.
Keywords: switching cost
JEL Classification: D43, L13
Suggested Citation: Suggested Citation
Biglaiser, Gary and Cremer, Jacques and Dobos, Gergely, Heterogenous Switching Costs (February 2014). CEPR Discussion Paper No. DP9809, Available at SSRN: https://ssrn.com/abstract=2444808
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