On how size and composition of customer bases affect equilibrium in a duopoly with switching costs
Working paper
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http://hdl.handle.net/11250/166612Utgivelsesdato
2001-10Metadata
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- Working papers (SNF) [809]
Sammendrag
Switching costs may facilitate monopoly pricing in a market with price competition between two suppliers of a homogenous good, provided the switchi8ng cost is above some critical level. It is also well known that asymmetric size of customer bases makes monopoly pricing more difficult. Adding consumer heterogeneity to the model we demonstrate that also composition of each rm’s customer base affects pricing, and this composition may aggravate or ease the incentives to break out of the monopoly pricing equilibrium.
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SNFSerie
Working Paper2001:26