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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 expecta...

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Bibliographic Details
Published in:	Journal of economics (Vienna, Austria) Vol. 98; no. 1; pp. 45 - 66
Main Authors:	Jeong, Yuncheol, Maruyama, Masayoshi
Format:	Journal Article
Language:	English
Published:	01-09-2009
Subjects:	Consumers Cost analysis Duopoly Enterprises Market analysis Price discrimination Price theory Strategic planning
Online Access:	Get full text
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Summary:	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. Reprinted by permission of Springer-Verlag
Bibliography:	ObjectType-Article-2 SourceType-Scholarly Journals-1 content type line 23 ObjectType-Feature-1
ISSN:	0931-8658
DOI:	10.1007/s00712-009-0083-x