Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235435 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9065
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
We consider a dynamic oligopoly on the beer market and study the differential effects of switching costs on product prices, market shares, and profits. Our demand estimation results show large differences in brand loyalty, and switching costs across customer income segments and beer brands. Our supply estimation results show that the low-quality firm experiences a higher competitive pressure on price since low-quality consumers are more price sensitive and switch more easily to the high-quality firm’s product than vice versa. The high-quality firm is better shielded from price competition, as its consumers are less likely to switch to the low-quality product.
Subjects: 
consumer heterogeneity
differentiated products
dynamic oligopoly
dynamic pricing
loyalty
state dependence
switching costs
JEL: 
L13
L25
L66
M21
M31
Document Type: 
Working Paper
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