Working Paper
Heterogenous Switching Costs
Gary Biglaiser, Jacques Crémer, Gergely Dobos
CESifo, Munich, 2014
CESifo Working Paper No. 4587
CESifo, Munich, 2014
CESifo Working Paper No. 4587
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.
CESifo Category
Industrial Organisation
Industrial Organisation
Keywords: switching cost
JEL Classification: D430, L130