Loading...
Please wait, while we are loading the content...
Similar Documents
Dynamic Price Competition with Consumer Switching Costs in Vertically Related Markets
| Content Provider | Semantic Scholar |
|---|---|
| Author | Fabra, Natalia |
| Copyright Year | 2005 |
| Abstract | An important feature of some industries is the coexistence between vertical integration and consumer switching costs. The aim of this paper is to uncover how these elements interact in determining prices as well as the endogenous vertical structure. More specifically, we consider an overlapping-generations model of price competition between two retailers that sell a homogenous good to consumers facing switching costs. Retailers have to satisfy their patronized consumers’ demand by acquiring inputs in the upstream market. We study Markovian pricing strategies such that, for a given vertical configuration, retail pricing decisions depend on retailers’ customer bases, and upstream market outcomes depend on retailers’ downstream market shares. Last, we endogenize the industry vertical structure and find that the level of switching costs determines whether all firms or only some of them will integrate. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.fep.up.pt/conferences/earie2005/cd_rom/Session%20II/II.J/Fabra.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
