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Consumer poaching, brand switching, and price transparency

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  • Schultz, Christian

Abstract

This paper addresses price transparency on the consumer side in markets with behavioral price discrimination which feature welfare reducing brand switching. When long-term contracts are not available, an increase in transparency intensifies competition, lowers prices and profits, reduces brand switching and benefits consumers and welfare. With long-term contracts, an increase in transparency reduces the use of long-term contracts, leading to more brand switching and a welfare loss. Otherwise, the results are the same as without long-term contracts.

Suggested Citation

  • Schultz, Christian, 2014. "Consumer poaching, brand switching, and price transparency," Economics Letters, Elsevier, vol. 123(3), pages 266-269.
    • Handle: RePEc:eee:ecolet:v:123:y:2014:i:3:p:266-269
    DOI: 10.1016/j.econlet.2014.02.024
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    References listed on IDEAS

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    1. Gu, Yiquan & Wenzel, Tobias, 2011. "Transparency, price-dependent demand and product variety," Economics Letters, Elsevier, vol. 110(3), pages 216-219, March.
    2. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    3. Schultz, Christian, 2009. "Transparency and product variety," Economics Letters, Elsevier, vol. 102(3), pages 165-168, March.
    4. Sinitsyn, Maxim, 2009. "Price dispersion in duopolies with heterogeneous consumers," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 197-205, March.
    5. Schultz, Christian, 2004. "Market transparency and product differentiation," Economics Letters, Elsevier, vol. 83(2), pages 173-178, May.
    6. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
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    Cited by:

    1. Yiquan Gu & Tobias Wenzel, 2017. "Consumer confusion, obfuscation and price regulation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(2), pages 169-190, May.

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    More about this item

    Keywords

    Behavioral price discrimination; Oligopoly; Price transparency; Competition policy;
    All these keywords.

    JEL classification:

    • L - Industrial Organization
    • L - Industrial Organization

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