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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.

    BoE swp689 (nov 2017).pdf - Author's Accepted Manuscript

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    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’.


    Item Type: Monograph (Working Paper)
    Additional Information: Staff working Paper No.689. ISSN 1749-9135
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Depositing User: Walter Beckert
    Date Deposited: 07 Nov 2017 16:38
    Last Modified: 02 Aug 2023 17:36


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