On how size and composition of customer bases affect equilibrium in a duopoly with switching costs

Tommy Staahl Gabrielsen () and Steinar Vagstad ()

Review of Economic Design, 2004, vol. 9, issue 1, pages 59-71

Abstract: Switching costs may facilitate monopoly pricing in a market with price competition between two suppliers of a homogenous good, provided the switching cost is above some critical level. It is also well known that asymmetric size of customer bases makes monopoly pricing more difficult. Adding consumer heterogeneity to the model we demonstrate that also composition of each firm’s customer base affects pricing, and this composition may aggravate or ease the incentives to break out of the monopoly pricing equilibrium. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Switching costs; consumer heterogenity; duopoly; price discrimination (search for similar items in EconPapers)
Date: 2004

Downloads: (external link)
http://hdl.handle.net/10.1007/s10058-004-0120-8 (text/html)
Access to full text is restricted to subscribers.

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: http://EconPapers.repec.org/RePEc:spr:reecde:v:9:y:2004:i:1:p:59-71

Ordering information: This journal article can be ordered from
http://link.springer.de/orders.htm

Access Statistics for this article

Review of Economic Design is edited by Atila Abdulkadiroglu and Matthew O. Jackson

More articles in Review of Economic Design from Springer
Series data maintained by Christopher F Baum ().