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    Spatial models of heterogeneous switching costs

    Beckert, Walter and Siciliani, P. (2017) Spatial models of heterogeneous switching costs. Working Paper. Bank of England.

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    Abstract

    The presence of sticky, often labelled ‘unengaged’, consumers is arguably one of the most intractable issues faced by competition regulators, in that it entrenches incumbency advantage. We develop a spatial linear model of heterogeneous switching costs that allows for asymmetric distributions of heterogeneous switching costs. We not only model uniform pricing and history-based price discrimination, but also the impact of regulatory intervention aimed at making it easier for customers to be upgraded to a better tariff from their current service provider, something we call ‘leakage’. Finally, we analyse firms’ incentive to adopt history-based price discrimination and voluntarily permit ‘leakage’.

    Metadata

    Item Type: Monograph (Working Paper)
    Additional Information: Staff working Paper No.689. ISSN 1749-9135
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Walter Beckert
    Date Deposited: 07 Nov 2017 16:38
    Last Modified: 13 Nov 2017 15:40
    URI: http://eprints.bbk.ac.uk/id/eprint/20201

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