Network competition with consumer switching costs: A model for the telecommunications sector

This paper gives a model for price competition under consumer switching costs in a network setting with interconnection charges. This simultaneous analysis is conducted in a discrete choice model with a multinomial logit differentiation for the customers and not in a traditional Hotelling framework. Analytical equilibrium results are derived for duopoly competition between identical Firms with both homogeneous and heterogeneous customers. A numerical method was used to study the effects of having different installed bases and to allow for the introduction of market growth.Switching costs, Entry, Mobile telecommunications, Market growth