Interfirm and intrafirm switching costs in a vertical differentiation setting: Green versus non-green products

Toolsema-Veldman, L., 2009, In : Journal of Economics & Management Strategy. 18, 1, p. 263-284 22 p.

Research output: Contribution to journalArticleAcademicpeer-review

In a vertical differentiation model where both duopolists supply the same two qualities of an otherwise homogeneous product, we derive the critical level of the interfirm switching cost needed to sustain monopoly pricing. In particular, we show how a decrease in the intrafirm switching cost may cause a decrease in this critical value, thereby facilitating monopoly pricing. We apply the results to a setting with green and nongreen products-in particular electricity-and discuss implications for policy measures intended to stimulate the production and consumption of green products.

Original languageEnglish
Pages (from-to)263-284
Number of pages22
JournalJournal of Economics & Management Strategy
Issue number1
Publication statusPublished - 2009



ID: 1824042