Konkurencja firm o różnym horyzoncie planowania w modelu Bertrand z kosztem decyzji i ograniczoną świadomością cenową klientów
Bertrand competition with switching cost

Summary/Abstract: We study the properties of Bertrand oligopolistic competition with switching cost and clients' bounded price perception. Firms optimize their prices by maximizing their profits in the long- or short-term planning horizon. Customers choose exactly one product. We use simulation methods to find equilibrium prices of assumed price setting dynamics. Customers, while buying the product, incur switching cost. The switching cost encompasses so called status quo effect, which is documented in behavioral economics. Moreover, customers are characterized by bounded price perception, which results in making random errors while choosing the cheapest product. We show that the relationship between switching cost, degree of clients' price-awareness and equilibrium prices depends on the length of firm's planning horizon.

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