Reimbursing Consumers' Switching Costs in Network Industries
نویسندگان
چکیده
منابع مشابه
Reimbursing 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...
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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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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...
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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...
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This paper analyzes an infinite-period oligopoly model where consumers incur costs when switching supplier. Every period only a fraction α of consumers considers switching. Firms can price-discriminate between their current customers and consumers who did not buy from the firm in the past period. In this setting, firms set relatively low introductory prices to attract new consumers. Contrary to...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2016
ISSN: 1556-5068
DOI: 10.2139/ssrn.2848553