Pay to Switch or Pay to Stay: Preference‐Based Price Discrimination in Markets with Switching Costs

Greg Shaffer and Z. John Zhang

Journal of Economics & Management Strategy, 2000, vol. 9, issue 3, 397-424

Abstract: In many markets, firms can price discriminate between their own customers and their rivals' customers, charging one price to consumers who prefer their own product and another price to consumers who prefer a rival's product. We find that when demand is symmetric, charging a lower price to a rival's customers is always optimal. When demand is asymmetric, however, it may be more profitable to charge a lower price to one's own customers. Surprisingly, price discrimination can lead to lower prices to all consumers, not only to the group that is more elastic, but also to the less elastic group.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (151)

Downloads: (external link)
https://doi.org/10.1111/j.1430-9134.2000.00397.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:9:y:2000:i:3:p:397-424

Ordering information: This journal article can be ordered from
http://www.blackwell ... ref=1058-6407&site=1

Access Statistics for this article

More articles in Journal of Economics & Management Strategy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().