EconPapers    
Economics at your fingertips  
 

Multi-Period Competition with Switching Costs

Alan Beggs and Paul Klemperer

No 436, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse an infinite-period model of duopolistic competition in a market with consumer switching costs, in which in every period new consumers arrive and a fraction of old consumers leaves. We show that prices (and profits) are higher than in a market without switching costs, and that this result does not depend importantly on the specific assumptions of our model. We show that switching costs make the market more attractive to a new entrant, even though an entrant must overcome the disadvantage that a large fraction of the market is already committed to the incumbent's product. We examine the evolution of prices and of firms' market shares, and show how these are affected by differences between firms' costs, interest rates, the rate of turnover of consumers and growth in the size of the market. We also show how to use our model to examine macroeconomic issues.

Keywords: Duopoly; Lock-in; Switching Costs (search for similar items in EconPapers)
Date: 1990-07
References: Add references at CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=436 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Multi-period Competition with Switching Costs (1992) Downloads
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:cpr:ceprdp:436

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=436

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-23
Handle: RePEc:cpr:ceprdp:436