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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BoE swp689 (nov 2017).pdf - Author's Accepted Manuscript Download (1MB) | Preview |
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: | 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: | https://eprints.bbk.ac.uk/id/eprint/20201 |
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