Heterogeneous switching costs

Gary Biglaiser, Jacques Crémer and Gergely Dobos

International Journal of Industrial Organization, 2016, vol. 47, issue C, 62-87

Abstract: We consider a two period model where consumers have different switching costs. Before the market opens an Incumbent sells to all consumers; after the market opens competitors appear. 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. Furthermore, we identify a free rider effect among consumers.

Keywords: Switching cost; Competition; Stackelberg; Bertrand (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718716300212
Full text for ScienceDirect subscribers only

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:eee:indorg:v:47:y:2016:i:c:p:62-87

DOI: 10.1016/j.ijindorg.2016.04.003

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().