The role of consumers in competition and competition policy
This paper develops the idea that consumers’ behavior matters significantly from the viewpoint of industry performance. This is examined through some theoretical propositions, but then at greater length by means of some case study examples. These examples demonstrate how, even in potentially competitive industries, reluctance on the part of consumers to search or to switch suppliers can lead to a sub-competitive outcome. The significance of non-traditional competition policy remedies in changing the outcome is drawn out.
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- Simon P. Anderson & Regis Renault, 1999.
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- Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 515-539.
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- Moshkin, N. & Shachar, R., 2000. "Switching Costs or Search Costs?," Papers 3-2000, Tel Aviv.
- Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
- John G. Lynch , Jr. & Dan Ariely, 2000. "Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution," Marketing Science, INFORMS, vol. 19(1), pages 83-103, April.
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