Promotion of Competition on the Demand Side
18 Pages Posted: 24 Nov 2004
Date Written: November 18, 2004
Abstract
Much government policy focuses on improving the supply-side conditions of product rivalry, but policymakers rarely address the potential beneficial impacts of improving the demand-side conditions of rivalry. This paper suggests that focus on such demand-side elements can yield substantial benefits to consumers, especially by changing the elasticity of residual demand faced by individual firms. Small changes in switching costs, search costs, or the number of "elastic" consumers can have large beneficial impacts on equilibrium outcomes. A number of practical examples are provided that illustrate how demand-side competition can be enhanced.
Keywords: Competition, switching costs, search costs
JEL Classification: D10, D83, L14
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Coordination and Lock-In: Competition with Switching Costs and Network Effects
By Joseph Farrell and Paul Klemperer
-
Coordination and Lock-In: Competition with Switching Costs and Network Effects
By Joseph Farrell and Paul Klemperer
-
Do Firms' Product Lines Include Too Many Varieties?
By Paul Klemperer and Jorge Padilla
-
Regulating Endogenous Customer Switching Costs
By Joshua S. Gans and Stephen P. King
-
Compatibility Incentives of a Large Network Facing Multiple Rivals
By David A. Malueg and Marius Schwartz
-
Numbers to the People: Regulation, Ownership and Local Number Portability
By Joshua S. Gans, Stephen P. King, ...