Strategic choice of price policy under exogenous switching costs

Yuncheol Jeong, Masayoshi Maruyama

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper examines the equilibrium incentive for firms to use behavior-based price discrimination in a duopoly market with exogenous switching costs. We find that if there is a large difference in the existing market shares between two firms, then discriminatory pricing is a unique Nash equilibrium. Otherwise, there are three Nash equilibria: both firms engage in discriminatory pricing, or engage in uniform pricing, or engage in mixed strategies. The respective firms are worse off in the discriminatory equilibrium compared with the others.

Original languageEnglish
JournalEconomics Bulletin
Volume12
Issue number1
Publication statusPublished - 2007 Jan 15

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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