Consider the following simple two period model: There are n customers, each of whom is willing to pay V per period to buy a nondurable...

      

Consider the following simple two period model: There are n customers, each of whom is willing to pay V per period to buy a nondurable good. There are two producers that produce the good at a constant marginal cost of c. The producers are unable to commit to future prices. In order to switch consumption from one firm to another, a consumer must pay a switching cost s. Use this model to discuss the concepts of switching costs and lock in.

  

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Faith
We suppose v>c but v+sFaimus answered the question on February 7, 2018 at 18:17


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