Langus, Gregor and Lipatov, Vilen (2008): On Quantity Competition With Switching Costs.
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We build a simple model of quantity competition to analyze the effect of switching costs on equilibrium behavior of duopolists. We characterize the industry structure as a function of initial sales of two firms. Contrary to the literature, initial asymmetries persist in our model even though the firms are identical. When the disparity between initial sales is large, the smaller firm may become very aggressive and get more than half of the market in equilibrium. When the firms have similar initial positions, they tend to be locked in them.
|Item Type:||MPRA Paper|
|Original Title:||On Quantity Competition With Switching Costs|
|Keywords:||quantity competition, switching costs|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
|Depositing User:||Vilen Lipatov|
|Date Deposited:||01. Jun 2009 07:09|
|Last Modified:||21. Feb 2013 03:32|
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