Multi-Period Competition with Switching Costs

Dynamic Price Competition with Switching Costs

We develop a continuous-time dynamic model of competition with switching costs to show that in a relatively simple Markov Perfect equilibrium, the dominant …rm concedes market share by charging higher prices than the smaller …rm. In the short-run, switching costs might have two types of anti-competitive e¤ects: …rst, higher switching costs imply a slower transition to a symmetric market structu...

Multi-armed Bandits with Metric Switching Costs

In this paper we consider the stochastic multi-armed bandit with metric switching costs. Given a set of locations (arms) in a metric space and prior information about the reward available at these locations, cost of getting a sample/play at every location and rules to update the prior based on samples/plays, the task is to maximize a certain objective function constrained to a distance cost of ...

Dynamic Duopoly Competition with Switching Costs and Network Externalities

This paper analyzes competition in a two-period differentiated-products duopoly in the presence of both switching costs and network effects. Consumers are assumed to have rational expectation about network sizes, and future prices. The equilibrium prices in both periods are lower than markets with just switching costs and they decrease with the magnitude of network effects. Hence, in any period...

Coordination and Lock-In: Competition with Switching Costs

Switching costs and network e ects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in e ciency, and gives vendors lucrative ex post market power|over the same buyer in the case of switching costs (or brand loyalty), or over others...

Coordination and Lock-In: Competition with Switching Costs and Network E ects Part II of IV Switching Costs Section