Discussion Paper Details

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Title: Heterogenous switching costs

Author(s): Gary Biglaiser, Jacques Crémer and Gergely Dobos

Publication Date: February 2014

Keyword(s): switching cost

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Biglaiser, G, Crémer, J and Dobos, G. 2014. 'Heterogenous switching costs'. London, Centre for Economic Policy Research.