Retention strategies in a dominant market

Abstract With the developments in technology, firms can gather information about consumers' purchase history which can be use to price discrimination accordingly - Behaviour-Based Price Discrimination (BBPD). Introducing the capacity of firms to implement retention strategies, the aim of this paper is to analyze the effects of BBPD where firms apply retention strategies under a switching costs approach. Assuming that there is a dominant position in the market with one firm with a higher inherit market share, retention strategies are good for consumers and bad for profits.