Commitment to a strategy of uniform pricing in a two-period duopoly with switching costs

Yuncheol Jeong, Masayoshi Maruyama

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

This paper studies decisions by firms of whether to attempt "behavior-based" price discrimination in markets with switching costs by using a two-period duopoly model. When both firms commit themselves to a pricing policy and consumers are "sophisticated" and have rational expectations, there is a dominant strategy equilibrium with both firms engaging in uniform pricing. Both firms are better off in the uniform pricing equilibrium, compared with the discriminatory equilibrium.

Original languageEnglish
Pages (from-to)45-66
Number of pages22
JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
Volume98
Issue number1
DOIs
Publication statusPublished - 2009 Sep 1

Keywords

  • Behavior-based price discrimination
  • Customer poaching
  • Switching cost

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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