|
| |
| Yuncheol Jeong and Masayoshi Maruyama |
| |
| ''Strategic choice of price policy under exogenous switching costs'' |
| ( 2008, Vol. 12 No.26 ) |
| |
| |
| 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. |
| |
| |
| Keywords: Behavior-based price discrimination |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
D4 - Market Structure and Pricing: General |
| |
| Manuscript Received : Oct 28 2008 | | Manuscript Accepted : Oct 28 2008 |
|
