Artikel
All-pay competition with captive consumers
We study a game in which two firms compete in quality to serve a market consisting of consumers with different initial consideration sets. If both firms invest below a certain threshold, they only compete for those consumers already aware of their existence. Above this threshold, a firm is visible to all and the highest investment attracts all consumers. On the one hand, the existence of initially captive consumers introduces an anti-competitive element: holding fixed the behavior of its rival, a firm with a larger captive segment enjoys a higher payoff from not investing at all. On the other hand, the fact that a firm’s initially captive consumers can still be attracted by very high quality introduces a pro-competitive element: a high investment becomes more profitable for the underdog when the captive segment of the dominant firm increases. The share of initially captive consumers therefore has a non-monotonic effect on the investment levels of both firms and on consumer surplus. We relate our findings to competition cases in digital markets.
- Language
-
Englisch
- Bibliographic citation
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Journal: International Journal of Industrial Organization ; ISSN: 1873-5703 ; Volume: 75 ; Year: 2021 ; Pages: -- ; Amsterdam: Elsevier
- Classification
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Sozialwissenschaften, Soziologie, Anthropologie
- Subject
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consideration set
regulation
all-pay auction
endogenous prize
digital markets
- Event
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Geistige Schöpfung
- (who)
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Foucart, Renaud
Friedrichsen, Jana
- Event
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Veröffentlichung
- (who)
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Elsevier
ZBW - Leibniz Information Centre for Economics
- (where)
-
Amsterdam
- (when)
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2021
- DOI
-
doi:10.1016/j.ijindorg.2021.102709
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Foucart, Renaud
- Friedrichsen, Jana
- Elsevier
- ZBW - Leibniz Information Centre for Economics
Time of origin
- 2021
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