Reserch seminar by Andrew Rhodes (University of Oxford): «Small switching costs are pro-competitive»

On Thursday, September 29 at 4.30 pm International College of Economics and Finance held Research seminar.
Venue: Pokrovski Bulvar, 11, Room Zh-822
Speaker: Andrew Rhodes (University of Oxford)
Theme: «Small switching costs are pro-competitive»

Abstact: When consumers face switching costs, they are less likely to change supplier in order to get a better deal. On the one hand firms want to charge a high price and exploit existing customers. But on the other hand firms want to charge a low price and attract people who can be exploited in the future. Theoretical models conclude that switching costs are anti-competitive because the former effect dominates the latter. These models usually assume homogeneous products and/or large switching costs. I build a less restrictive model, and find that switching costs are strongly pro-competitive and often beneficial to consumers.

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