Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5077819 | International Journal of Industrial Organization | 2016 | 26 Pages |
Abstract
We consider a two period model where consumers have different switching costs. Before the market opens an Incumbent sells to all consumers; after the market opens competitors appear. 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. Furthermore, we identify a free rider effect among consumers.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Gary Biglaiser, Jacques Crémer, Gergely Dobos,