DYNAMIC PRICING VIA FEES IN DUOPOLY WITH VARYING USAGE LEVELS
Organizing the New Industrial Economy
ISBN: 978-0-76231-081-4, eISBN: 978-1-84950-254-2
Publication date: 17 December 2003
Abstract
We examine a two-period, homogeneous product duopoly model. Consumers choose the supplier that demands the lowest two-part tariff payment. When per unit rates are given, firms’ competition in fixed fees leads to an endogenous segmentation of the market, with positive profit for both firms and consumers self-selecting according to their usage levels. Consumers’ usage levels vary between periods but switching suppliers is costly. Examining various possibilities (including price discrimination between old and new customers) reveals that switching affects the two suppliers asymmetrically, as the average usage level of a firm’s clientele changes.
Citation
Griva, K. and Vettas, N. (2003), "DYNAMIC PRICING VIA FEES IN DUOPOLY WITH VARYING USAGE LEVELS", Baye, M.R. (Ed.) Organizing the New Industrial Economy (Advances in Applied Microeconomics, Vol. 12), Emerald Group Publishing Limited, Leeds, pp. 267-297. https://doi.org/10.1016/S0278-0984(03)12010-X
Publisher
:Emerald Group Publishing Limited
Copyright © 2003, Emerald Group Publishing Limited