Do Switching Costs Make Markets Less Competitive?

  title={Do Switching Costs Make Markets Less Competitive?},
  author={Jean-Pierre Dub{\'e} and G{\"u}nter J. Hitsch and Peter E. Rossi},
  journal={Journal of Marketing Research},
  pages={435 - 445}
The conventional wisdom in economic theory holds that switching costs make markets less competitive. This article challenges this claim. The authors formulate an empirically realistic model of dynamic price competition that allows for differentiated products and imperfect lock-in. They calibrate this model with data from frequently purchased packaged goods markets. These data are ideal in the sense that they have the necessary variation to identify switching costs separately from consumer… 

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