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Enhancing Market Power by Reducing Switching Costs

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  • Bouckaert, J.M.C.
  • Degryse, H.A.
  • Provoost, T.

    (Tilburg University, Center for Economic Research)

Abstract

A proportional decrease in switching costs increases competition and social welfare. However, a lump-sum decrease in switching costs softens competition and does not invariably increase social welfare.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2008-91.

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Date of creation: 2008
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Handle: RePEc:dgr:kubcen:200891

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References

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  1. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, Elsevier.
  2. Buehler, Stefan & Dewenter, Ralf & Haucap, Justus, 2006. "Mobile number portability in Europe," Telecommunications Policy, Elsevier, vol. 30(7), pages 385-399, August.
  3. Shy, Oz, 2002. "A quick-and-easy method for estimating switching costs," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 71-87, January.
  4. V. Brian Viard, 2007. "Do switching costs make markets more or less competitive? The case of 800-number portability," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 146-163, 03.
  5. Vasso Ioannidou & Steven Ongena, 2010. ""Time for a Change": Loan Conditions and Bank Behavior when Firms Switch Banks," Journal of Finance, American Finance Association, vol. 65(5), pages 1847-1877, October.
  6. Erland Nier & Celine Gondat-Larralde, 2004. "The Microeconomics Of Retail Banking - An Empirical Analysis Of The UK Market For Personal Current Accounts," Royal Economic Society Annual Conference 2004 110, Royal Economic Society.
  7. Gans, Joshua S. & King, Stephen P. & Woodbridge, Graeme, 2001. "Numbers to the people: regulation, ownership and local number portability," Information Economics and Policy, Elsevier, vol. 13(2), pages 167-180, June.
  8. Biglaiser, Gary & Crémer, Jacques & Dobos, Gergely, 2013. "The value of switching costs," Journal of Economic Theory, Elsevier, vol. 148(3), pages 935-952.
  9. Fershtman, C. & Gandal, N., 1991. "Disadvantageous Semicollusion," Papers 37-91, Tel Aviv.
  10. Garcia Marinoso, Begona, 2001. "Technological Incompatibility, Endogenous Switching Costs and Lock-In," Journal of Industrial Economics, Wiley Blackwell, vol. 49(3), pages 281-98, September.
  11. Paul Klemperer & A. Jorge Padilla, 1997. "Do Firms' Product Lines Include Too Many Varieties?," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 472-488, Autumn.
  12. Jan Bouckaert & Hans Degryse, 2004. "Softening Competition by Inducing Switching in Credit Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 27-52, 03.
  13. Buehler, Stefan & Haucap, Justus, 2003. "Mobile Number Portability," Working Paper 17/2003, Helmut Schmidt University, Hamburg.
  14. Klemperer, Paul, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 375-94, May.
  15. Yongmin Chen, 1997. "Paying Customers to Switch," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 877-897, December.
  16. Kim, Moshe & Kliger, Doron & Vale, Bent, 2003. "Estimating switching costs: the case of banking," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 25-56, January.
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Citations

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Cited by:
  1. Rhodes, Andrew, 2013. "Re-examining the Effects of Switching Costs," MPRA Paper 45982, University Library of Munich, Germany.
  2. Gary Biglaiser & Jacques Crémer & Gergely Dobos, 2014. "Heterogenous Switching Costs," CESifo Working Paper Series 4587, CESifo Group Munich.
  3. Claudio Ribeiro De Lucinda & Mariana Oliveira E Silv, 2014. "Switching Costs And The Extent Of Potential Competition In Brazilian Banking," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 139, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  4. Biglaiser, Gary & Crémer, Jacques & Dobos, Gergely, 2013. "Heterogenous switching costs," IDEI Working Papers 809, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Biglaiser, Gary & Crémer, Jacques & Dobos, Gergely, 2013. "Heterogenous switching costs," TSE Working Papers 13-451, Toulouse School of Economics (TSE).

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