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Journal of Economics

, Volume 98, Issue 1, pp 45–66 | Cite as

Commitment to a strategy of uniform pricing in a two-period duopoly with switching costs

  • Yuncheol JeongEmail author
  • Masayoshi Maruyama
Article

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.

Keywords

Behavior-based price discrimination Switching cost Customer poaching 

JEL Classification

L13 D43 M21 

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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  1. 1.Faculty of Business and CommerceKeio UniversityTokyoJapan
  2. 2.Graduate School of Business AdministrationKobe UniversityKobeJapan

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