Challenging the incumbent: Entry in markets with captive consumers and taste heterogeneity

B-Tier
Journal: Journal of Economics & Management Strategy
Year: 2022
Volume: 31
Issue: 4
Pages: 961-979

Authors (2)

Christian Oertel (not in RePEc) Armin Schmutzler (Universität Zürich)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We analyze entry of a firm with a new and differentiated product into a market with two properties: An existing incumbent has a captive consumer base, and all consumers have heterogeneous tastes. The interaction between the share of captive consumers and the degree of taste heterogeneity leads to nonmonotone effects of both parameters on entry: The captive share can have an inverse‐U relation with entry profits, and higher taste heterogeneity (i.e., less product substitutability) can impede entry in the presence of captive consumers.

Technical Details

RePEc Handle
repec:bla:jemstr:v:31:y:2022:i:4:p:961-979
Journal Field
Industrial Organization
Author Count
2
Added to Database
2026-01-29