Competition and Dynamic Pricing in Markets with Consumer Switching Costs

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

In markets with switching costs, firms increase their price as their market share grows. I study the effect of entry on these price dynamics in the Dutch mortgage market. Since en- try occurred in a subset of markets, I control for market-level shocks with a differences-in- differences strategy. Moreover, I exploit the multi-product nature of incumbents to control for unobserved firm-level differences. Consistent with a simple theoretical framework, banks with more locked-in customers decrease their interest rates less after entry. This can explain why policies that encourage competition often disappoint in markets with switching costs. I also discuss implications for competition policy.
OriginalsprogEngelsk
Publikationsdato2019
Antal sider36
StatusUdgivet - 2019
Begivenhed 46th Annual Conference of the European Association for Research in Industrial Economics. EARIE 2019 - Ciutadella of the Universitat Pompeu Fabra, Barcelona, Spanien
Varighed: 30 aug. 20191 sep. 2019
Konferencens nummer: 46
https://www.barcelonagse.eu/earie2019

Konference

Konference 46th Annual Conference of the European Association for Research in Industrial Economics. EARIE 2019
Nummer46
LokationCiutadella of the Universitat Pompeu Fabra
LandSpanien
ByBarcelona
Periode30/08/201901/09/2019
Internetadresse

Citationsformater