Endogeneizing Switching Costs: Mix and Match in a Dynamic Framework.

This paper analyses how sequential purchase of the different components assembled in some consumption good affects firm's pricing behaviour and compatibility decisions. With incompatible brands, consumers who wish to purchase some component of an alternative brand are forced to replace the durable parts they already own, thus the price of these durable parts can be considered as an endogenous switching cost. we examine how pricing incentives depend on oligopolistic rivalry and on whether firms are multiproduct or not. Finally, we explore the time consistency and welfare implications of technological choice.