Pricing with Consumer Switching Costs: Evidence from the Credit Card Market

18 Pages Posted: 24 Feb 2003

See all articles by Victor Stango

Victor Stango

UC Davis Graduate School of Management

Abstract

The credit card market is a natural setting for investigating the relationship between pricing and consumer switching costs. I find, using a detailed panel of credit card issuers, that switching costs are an important influence on pricing for commercial banks. The results are stronger for commercial banks with risky customer bases, suggesting that there is a relationship between default and switching costs. Switching costs appear to have almost no influence on pricing for credit unions, a result that is consistent with their status as not-for-profit entities.

Suggested Citation

Stango, Victor, Pricing with Consumer Switching Costs: Evidence from the Credit Card Market. Journal of Industrial Economics, Vol. 50, pp. 475-492, 2002, Available at SSRN: https://ssrn.com/abstract=369728

Victor Stango (Contact Author)

UC Davis Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

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