Strategic short-termism: Implications for the management and acquisition of customer relationships

Topi Miettinen; Rune Stenbacka

doi:10.1016/j.jebo.2018.07.006

Strategic short-termism: Implications for the management and acquisition of customer relationships

Topi Miettinen, Rune Stenbacka

Economics, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

4 Citations (Scopus)

Abstract

We study a duopoly model of history-based price competition with switching costs and demonstrate how strategic history-based pricing induces the owners of the firms to implement managerial short-termism by delegating the pricing decisions to managers with a discount factor lower than that of the owners. Managerial short-termism is a strategic device whereby owners can soften price competition at the stage when customer relationships are established. The degree of short short-termism is shown to depend on the market structure, the intensity of competition and the magnitude of switching costs.

Original language	English
Peer-reviewed scientific journal	Journal of Economic Behavior & Organization
Volume	153
Issue number	September
Pages (from-to)	200-222
Number of pages	23
ISSN	0167-2681
DOIs	https://doi.org/10.1016/j.jebo.2018.07.006
Publication status	Published - 04.08.2018
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
Short-termism
Switching cost
Duopoly
Customer relationship
Pricing
Delegation

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1-s2.0-S0167268118301835-mainFinal published version, 875 KBLicence: CC BY-NC-ND

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Strategic short-termism: Implications for the management and acquisition of customer relationships

Abstract

Keywords

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