How Do Switching Costs Affect Market Concentration and Prices in Network Industries?
نویسندگان
چکیده
منابع مشابه
How do Switching Costs Affect Market Concentration and Prices in Network Industries?
Switching costs are prevalent in network industries, and this paper investigates their effects on market outcome. I find that the role of switching costs depends on network effects and the outside option. Without a viable outside option, high switching costs can neutralize the tendency towards market dominance associated with network effects, but with a viable outside option, switching costs fa...
متن کاملHow do Switching Costs A¤ect Market Concentration and Prices in Network Industries?
I investigate the e¤ects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option. I nd that the role of switching costs depends on network e¤ects and the outside option. Without a viable outside option, high switching costs can neutralize the tendency towards high market concentration associated with...
متن کاملReimbursing Consumers’ Switching Costs in Network Industries
This paper investigates firms’ decisions to reimburse consumers’ switching costs in network industries. Prior literature finds that switching costs incentivize firms to harvest their locked-in consumers rather than price aggressively for market dominance, thereby resulting in a lower market concentration. Using a dynamic duopoly model, we show that this result is reversed if firms have the opti...
متن کاملProduct Compatibility in Network Industries with Switching Costs
This paper investigates how switching costs affect product compatibility and market dynamics in network industries. A reduction in the switching cost makes the firms’ products more attractive relative to the outside good, which diminishes the market expansion benefit of making products compatible. As a result, the larger firm is more likely to veto compatibility in order to maintain its install...
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How Do Layoff Costs Affect Employment? General equilibrium analyses of layoff costs have had mixed messages on the implications for employment. This paper brings out the economic forces at work and explains the disparate results. Specifically, we show that positive employment effects of layoff costs come through reducing labor reallocation, whereas negative effects come through reducing the pri...
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ژورنال
عنوان ژورنال: The Journal of Industrial Economics
سال: 2016
ISSN: 0022-1821
DOI: 10.1111/joie.12102