|
Archive@NYU >
Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/31545
|
| Title: | Switching Costs and Equilibrium Prices |
| Authors: | Cabral, Luis |
| Issue Date: | 3-May-2012 |
| Abstract: | In a competitive environment, switching costs have two eects. First,
they increase the market power of a seller with locked-in customers.
Second, they increase competition for new customers. I provide
conditions under which switching costs decrease or increase equilibrium
prices. Taken together, the suggest that, if markets are very
competitive to begin with, then switching costs make them even more
competitive; whereas if markets are not very competitive to begin with,
then switching costs make them even less competitive. In the above
statements, by "competitive" I mean a market that is close to
a symmetric duopoly or one where the sellers' discount factor is very high. |
| URI: | http://hdl.handle.net/2451/31545 |
| Appears in Collections: | Economics Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
