EconPapers    
Economics at your fingertips  
 

Switching Beers? The Effects of Switching Costs on Prices and Profits in Competitive Markets

Xiaoyang He and Ralph Siebert

No 9065, CESifo Working Paper Series from CESifo

Abstract: We consider a dynamic oligopoly on the beer market and study the differential effects of switching costs on product prices, market shares, and profits. Our demand estimation results show large differences in brand loyalty, and switching costs across customer income segments and beer brands. Our supply estimation results show that the low-quality firm experiences a higher competitive pressure on price since low-quality consumers are more price sensitive and switch more easily to the high-quality firm’s product than vice versa. The high-quality firm is better shielded from price competition, as its consumers are less likely to switch to the low-quality product.

Keywords: consumer heterogeneity; differentiated products; dynamic oligopoly; dynamic pricing; loyalty; state dependence; switching costs (search for similar items in EconPapers)
JEL-codes: L13 L25 L66 M21 M31 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-agr, nep-com, nep-gth and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp9065.pdf (application/pdf)

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:ces:ceswps:_9065

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

 
Page updated 2024-02-18
Handle: RePEc:ces:ceswps:_9065