This paper presents a model in which firms invest on their customer-networks to maintain current and future profits. The model is used to illustrate how the costs of maintaining networks and uncertainties about the customer-networks reduce the importance of making investments on the customer-based. Empirical evidence provides support for the theory.
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- Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
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- Konigstein, Manfred & Muller, Wieland, 2001.
"Why firms should care for customers,"
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- Königstein, Manfred & Müller, Wieland, 2000. "Why firms should care for customers," SFB 373 Discussion Papers 2000,102, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Julio J. Rotemberg & Michael Woodford, 1991. "Markups and the Business Cycle," NBER Chapters,in: NBER Macroeconomics Annual 1991, Volume 6, pages 63-140 National Bureau of Economic Research, Inc.
- Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
- Homburg, Christian & Rudolph, Bettina, 2001. "Customer satisfaction in industrial markets: dimensional and multiple role issues," Journal of Business Research, Elsevier, vol. 52(1), pages 15-33, April.
- M. Ali Choudhary & J. Michael Orszag, 2007. "Costly customer relations and pricing," Oxford Economic Papers, Oxford University Press, vol. 59(4), pages 641-661, October. Full references (including those not matched with items on IDEAS)
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