Dynamic pricing in the presence of store-switching consumers

We introduce and analyze two-period intertemporal competitive dynamic pricing models in the presence of both store-switchers and store-loyal consumers who may be either myopic or strategic. Our analysis reveals that (i) in the presence of storeswitching consumers, retailers’ profits may increase with an increase in the patience level of the strategic consumers, which never happens when consumers are store-loyal; (ii) when all consumers are store-switchers, retailers can be better off if they both ignore consumers’ strategic behavior than if neither ignores consumers’ strategic behavior, which never happens when all consumers are store-loyal; (iii) when all consumers are myopic, increased store-loyalty level increases prices and retailers’ revenues. By contrast, when all consumers are strategic, increased store-loyalty level may decrease prices and retailers’ revenues.