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Biglaiser, Gary, Crémer, Jacques
and Dobos, Gergely
(2013)
The value of switching costs.
Journal of Economic Theory, vol. 148 (n° 3).
pp. 935-952.
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Abstract
We study a dynamic model with an incumbent monopolist and entry in every subsequent period. We first show that if all consumers have the same switching cost, then the intertemporal profits of the incumbent are the same as if there was only one period. We then study the consequences of heterogeneity of switching costs. We prove that even low switching cost customers have value for the incumbent: when there are more of them its profits increase as their presence hinders entrants who find it more costly to attract high switching cost customers.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | May 2013 |
| Refereed: | Yes |
| Uncontrolled Keywords: | Switching cost, Dynamic competition, Incumbency, Entry |
| JEL Classification: | D43 - Oligopoly and Other Forms of Market Imperfection L12 - Monopoly; Monopolization Strategies L13 - Oligopoly and Other Imperfect Markets |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 09 Jul 2014 17:37 |
| Last Modified: | 02 Apr 2021 15:48 |
| OAI Identifier: | oai:tse-fr.eu:27432 |
| URI: | https://publications.ut-capitole.fr/id/eprint/15691 |
Available Versions of this Item
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The value of switching costs. (deposited 18 Jan 2012 06:01)
- The value of switching costs. (deposited 09 Jul 2014 17:37) [Currently Displayed]
