Dynamic competition with customer recognition

In many markets firms have same information about their customers resulting from the consumers' past choice behavior. Given this information, firms can better target their market practices with respect to their customers. This article considers such a situation in a duopoly with infinitely lived firms and overlapping generations of consumers. Firms can set different prices for their previous customers and their new customers. A new customer may either have bought the competing product in the previous period or be new to the market. I identify three effects: (i) Firms lower prices to attract the competitor's previous customers. (ii) Greater consumer patience intensifies competition. (iii) Greater firm patience softens the competitive interaction. With patient firms and consumers, prices are lower than when there is no customer recognition.