Who pays for switching costs?

Market structure and the competitive effects of switching costs

“…We assume that 2 There are other recent papers showing the potential pro-competitive effect of switching costs. See Viard (2007), Cabral (2011Cabral ( , 2012, Dubé et al (2009), Shi et al (2006, Doganoglu (2010), Arie and Grieco (2013), and Rhodes (2013). Our paper differs from this literature, which features overlapping generation models for finitely lived consumers and discrete time models of dynamic price competition.…”

Bargains Followed by Bargains: When Switching Costs Make Markets More Competitive

“…Two exceptions are von Weizsäcker's (1984) model where individual brand preferences change over time with some positive probability of an independent redraw, and Cabral (2014) who considers 11. Both Dubé et al (2009) and Arie and Grieco (2014) examine a switching costs model with a logit model characterizing the product differentiation. The theoretical results of Dubé et al (2009) are obtained by using numerical methods on a restricted version of the model and Arie and Grieco (2014) only consider the case of no/small switching costs.…”

History-based versus uniform pricing in growing and declining markets

“…For reasons of tractability we focus on an infinite OLG model with locked-in consumers, thereby adopting the same modeling choice as Beggs and Klemperer (1992) and To (1996) in their analysis of uniform pricing. 2 Other studies analyzing the effects of switching costs with uniform pricing in an infinite-horizon model include Rosenthal (1986), Farrell andShapiro (1988), Padilla (1995), Chen andRosenthal (1996), Villas-Boas (2006), Arie and Grieco (2014), and Rhodes (2014). Cabral (2016) studies competition with history-based pricing in the presence of switching costs, but makes no comparison with uniform pricing.…”