Multi-Period Competition with Switching Costs

1992/05/01 by Alan Beggs, Paul Klemperer · 5 citations
Economics, Econometrics and Finance · Business, Management and Accounting · Engineering · #Merger and Competition Analysis #Digital Platforms and Economics #ICT Impact and Policies

paper · doi:10.2307/2951587

Abstract

The authors analyze the evolution of duopolists' prices and market shares in an infinite-period market with consumer switching costs in which in every period new consumers arrive and a fraction of old consumers leaves. They show prices (and profits) are higher than without switching costs and that this result does not depend importantly on their specific assumptions. The authors show 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. They also examine the effects of market growth. Copyright 1992 by The Econometric Society.

Cited by

• Predicting Household Switching Behavior and Switching Costs at Depository Institutions
• Do switching costs make markets more or less competitive? The case of 800‐number portability
• Data portability and competition: Can data portability increase both consumer surplus and profits?
• Two Kinds of Consumer Switching Costs
• Repeated Games with Switching Costs: Stationary vs History Independent\n Strategies
• Dynamic Models of Reputation and Competition in Job-Market Matching

Related

• Costlier switching strengthens competition even without advertising
• Entry Deterrence in Markets with Consumer Switching Costs
• Do switching costs make markets more or less competitive? The case of 800‐number portability
• Do Switching Costs Make Markets More or Less Competitive?: The Case of 800-Number Portability
• Heterogeneity and Increasing Returns May Drive Socio-Economic Transitions