Abstract
This paper studies decisions by firms of whether to attempt “behavior-based” price discrimination in markets with switching costs by using a two-period duopoly model. When both firms commit themselves to a pricing policy and consumers are “sophisticated” and have rational expectations, there is a dominant strategy equilibrium with both firms engaging in uniform pricing. Both firms are better off in the uniform pricing equilibrium, compared with the discriminatory equilibrium.
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Jeong, Y., Maruyama, M. Commitment to a strategy of uniform pricing in a two-period duopoly with switching costs. J Econ 98, 45–66 (2009). https://doi.org/10.1007/s00712-009-0083-x
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DOI: https://doi.org/10.1007/s00712-009-0083-x