Customer poaching and brand switching

Firms sometimes try to "poach" the customers of their competitors by offeri ng them inducements to switch. We analyze duopoly poaching under both short -term and longterm contracts assuming either that each consumer's brand pre ferences are fixed over rime or that preferences are independent over time. With fixed preferences, short-term contracts lead to poaching and socially inefficient switching. The equilibrium with long-term contracts has less s witching than when only short-term contracts are feasible, and it involves the sale of both short-term and long-term contracts. With independent prefe rences, short-term contracts are efficient, but long-term contracts lead to inefficiently little switching.