Supplier surfing: Competition and consumer behavior in subscription markets

Published

Journal Article

I explore the practice of offering subscribers enticements to switch suppliers. This type of competition is natural in subscription markets for homogeneous goods and services. Efficiency is impaired because subscribers are induced to expend resources changing suppliers. Subscription markets are fully competitive only when three or more firms serve the industry. In this case, the price offered to switchers is below cost, while nonswitchers pay a premium. Each firm earns rent on its customer base, but zero expected profit on each new subscriber it attracts. When firms can track switching behavior, consumers may change suppliers in order to establish reputations.

Full Text

Duke Authors

Cited Authors

  • Taylor, CR

Published Date

  • January 1, 2003

Published In

Volume / Issue

  • 34 / 2

Start / End Page

  • 223 - 246

International Standard Serial Number (ISSN)

  • 0741-6261

Digital Object Identifier (DOI)

  • 10.2307/1593715

Citation Source

  • Scopus