TY  - BOOK
AU  - Schmidt,Robert C
TI  - Price competition and innovation in markets with brand loyalty
SN  - 09318658
AV  - HB171.5 JOU 
PY  - 2013///
CY  - Heidelberg
PB  - Springer
KW  - Switching cost
KW  - Market share
KW  - Customer base
N2  - Intuition suggests that in markets with consumer lock-in (‘brand loyalty’), firms with a large customer base earn higher profits. We show for a homogeneous goods duopoly that the intuition can be misleading, as the intensity of price competition depends on the initial market split. We derive mixed-strategy equilibria, and show that competition is often most intense when the market is split evenly. As a result, firms coordinate on an asymmetric split when consumers are not yet attached to firms. We also allow for asymmetric costs, and analyze when firms with a larger customer base are more eager to innovate
UR  - 10.1007/s00712-012-0296-2
ER  -