haku: @indexterm Cost variance / yhteensä: 46
viite: 17 / 46
| Tekijä: | Klemperer, P. |
| Otsikko: | Price wars caused by switching costs. |
| Lehti: | Review of Economic Studies
1989 : JUL, VOL. 56:187, p. 405-420 |
| Asiasana: | PRICES PRICING COST VARIANCE |
| Kieli: | eng |
| Tiivistelmä: | Consumers often have "switching costs" of changing between functionally equivalent brands or using any brand for the first time. A four-period complete-information model of a market with switching costs in which new entry occurs after the second period is analysed. The new entry results in equilibrium in a price war. That is, the new entrants' prices are higher in the post-entry period than in the entry period, and the incumbent's price falls in either the pre-entry period or the entry period, and subsequently rises. The incumbent's lowering its price in the pre-entry periods can be interpreted as limit-pricing behaviour. Two types of price war are distinguished, and it is shown how the type or mixture of types depends on the size of switching costs. |
SCIMA