MIXED PRICING IN OLIGOPOLY WITH CONSUMER SWITCHING COSTS

In this paper we develop an alternative and more natural two-period model of duopolistic competition with switching costs. We find that overall competition is always less severe when consumers find switching suppliers expensive. However, the relationship between the strength of competition and the importance of switching costs is not monotonic. Interestingly, competition between ex ante identical firms naturally results in firms having asymmetric market shares in equilibrium.