Working paper

Heterogenous switching costs

Gary Biglaiser, Jacques Crémer, and Gergely Dobos

Abstract

We consider a simple two period model where consumers have different switching costs. Before the market opens, there was an incumbent who sold to all consumers. 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.

Keywords

switching; cost;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L13: Oligopoly and Other Imperfect Markets

Replaced by

Gary Biglaiser, Jacques Crémer, and Gergely Dobos, “Heterogenous switching costs”, International Journal of Industrial Organization, vol. 47, July 2016, pp. 62–87.

Reference

Gary Biglaiser, Jacques Crémer, and Gergely Dobos, “Heterogenous switching costs”, TSE Working Paper, n. 13-451, December 2013, revised October 2015.

See also

Published in

TSE Working Paper, n. 13-451, December 2013, revised October 2015