Duopolistic competition in markets where consumers have switching costs
In a dynamic competition model where firms initially share half of the market and consumers have switching costs, consumers’ sophistication, lifespan and concentration impact the possibility to set collusive prices. I first show that with strategic long-run consumers, collusion is harder to implemen...
- Autores:
- Tipo de recurso:
- Fecha de publicación:
- 2017
- Institución:
- Universidad del Rosario
- Repositorio:
- Repositorio EdocUR - U. Rosario
- Idioma:
- spa
- OAI Identifier:
- oai:repository.urosario.edu.co:10336/13453
- Acceso en línea:
- https://doi.org/10.48713/10336_13453
http://repository.urosario.edu.co/handle/10336/13453
- Palabra clave:
- Costes de cambio
Colision de precios
Consumidores estratégicos
Producción
D43
L13
L12
Switching cost
Price collusion
Strategic consumers
Oligopolios
Mercados
- Rights
- License
- http://purl.org/coar/access_right/c_abf2
Summary: | In a dynamic competition model where firms initially share half of the market and consumers have switching costs, consumers’ sophistication, lifespan and concentration impact the possibility to set collusive prices. I first show that with strategic long-run consumers, collusion is harder to implement than when consumers are not strategic: with sophisticated consumers, a deviating firm can cash-in the rents that a buyer obtains after switching. I then study the consequences of relaxing buyers concentration and show that collusion is then easier to maintain than with non-strategic consumers: with strategic consumers a firm must offer a low price at the moment of deviation as consumers can benefit from increased competition, emerging from an asymmetric market structure, without having to pay switching costs. The paper suggests simple policy recommendations: it does not suffice to educate consumers about the competitive effects of their current purchasing decisions, but central purchasing agencies also need to be promoted. |
---|