Jump to ContentJump to Main Navigation
Show Summary Details

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year

IMPACT FACTOR 2015: 0.250
5-year IMPACT FACTOR: 0.825

SCImago Journal Rank (SJR) 2015: 0.501
Source Normalized Impact per Paper (SNIP) 2015: 0.418
Impact per Publication (IPP) 2015: 0.455

See all formats and pricing
Volume 2, Issue 1 (Feb 2002)


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

A Laboratory Study of Customer Markets

Timothy N. Cason
  • 1Purdue University,
/ Daniel Friedman
  • 2University of California, Santa Cruz,
Published Online: 2002-02-13 | DOI: https://doi.org/10.2202/1538-0637.1020


In our laboratory customer markets, sellers post price and buyers incur cost (controlled at zero, low and high values) when they switch to a new seller. Sellers’ production costs follow various random walks in 28 sessions, each with 50-100 trading periods.

We find that prices are sticky, and sellers absorb almost half of their cost shocks. Transaction prices are about 10 percent higher when buyers face positive switch costs, and trading efficiency is slightly impaired. Experienced buyers switch about 10 percent of the time with either high or low switch costs. Buyers switch more often when they face a higher posted price, have a lower valuation for the good, face lower switch costs, have more time remaining, and have more favorable information on alternative prices. Sellers price higher when they have more attached buyers, when buyers have less information on rivals’ prices, when rivals post higher prices, and when less time remains.

Keywords: experiment; switch costs; market power

About the article

Published Online: 2002-02-13

Citation Information: Advances in Economic Analysis & Policy, ISSN (Online) 1538-0637, DOI: https://doi.org/10.2202/1538-0637.1020. Export Citation

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Isaac Kleshchelski and Nicolas Vincent
Journal of Monetary Economics, 2009, Volume 56, Number 3, Page 344
Emi Nakamura and Jón Steinsson
Journal of Monetary Economics, 2011, Volume 58, Number 3, Page 220
Cary A. Deck and Bart J. Wilson
Journal of Economic Behavior & Organization, 2008, Volume 67, Number 1, Page 134

Comments (0)

Please log in or register to comment.
Log in