Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade

@article{Klemperer1992CompetitionWC,
  title={Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade},
  author={Paul Klemperer},
  journal={The Review of Economic Studies},
  year={1992},
  volume={62},
  pages={515-539}
}
  • P. Klemperer
  • Published 1 July 1992
  • Business, Economics
  • The Review of Economic Studies
We survey recent work on competition in markets in which consumers have costs of switching between competing firms' products. In a market with switching costs (or "brand loyalty"), a firm's current market share is an important determinant of its future profitability. We examine how the firm's choice between setting a low price to capture market share, and setting a high price to harvest profits by exploiting its current locked-in customers, is affected by the threat of new entry, interest rates… 
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References

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In many markets consumers have "switching costs", for example learning costs or transaction costs, of changing between functionally equivalent brands of a product, or of using any brand for the first
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