MULTIPERIOD COMPETITION WITH SWITCHING COSTS - AN OVERLAPPING GENERATIONS FORMULATION

I examine an infinite-period duopoly market with positive consumer swi tching costs and overlapping generations of consumers. When consumers have a finite time-horizon, then, unlike Beggs and Klemperer [1992], t he two firms may alternate dominance from one period to the next, alte rnately charging high and low prices. This agrees with the intuition t hat firms with a high locked-in market share may set price so as to ex ploit that market share, which causes a subsequent low market share am ong the new cohort of buyers, leading to lower prices, etc.