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| Author: | Padilla, J. |
| Title: | Revisiting dynamic duopoly with consumer switching costs |
| Journal: | Journal of Economic Theory
1995 : DEC, VOL. 67:2, p. 520-530 |
| Index terms: | CONSUMERS COSTS DUOPOLY |
| Language: | eng |
| Abstract: | The degree of collusiveness of a market with consumer switching costs is analyzed in an infinite-horizon model of duopolistic competition. In contrast with the previous analyses, the author assumes that firms compete for the demand for a homogeneous good by setting prices simultaneously in each period. This problem is formulated as a simple stochastic game, and a symmetric stationary Markovian perfect equilibrium with distinctive economic features is studied. The author shows that switching costs unambiguously relax price competition in equilibrium but that, on the contrary, they make tacit collusion more difficult to sustain. |
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