Switching costs drive prices up, locking consumers in long-term contracts.
The article examines how prices of contracts with different durations are influenced by switching costs in the Swedish daily newspaper markets. By analyzing data, the researchers found that more competition leads to increased price discrimination. Financially distressed firms may raise prices to cover short-term expenses, impacting long-term profits. Large price changes are announced earlier in duopoly markets, with price leadership being common. Duopolies and weaker firms tend to use more price discrimination, especially in subscription markets.