DUOPOLY WITH CHANGE AND RETENTION COSTS. THE CONSUMER SURPLUS AND WELFARE EFFECTS

In a context of free entry to analyze changes that occur in the consumer surplus and social welfare, as well as other conditions of equilibrium, when enter a competitor in a monopolistic market in which there is a firm established. We approach the equilibrium in a model of duopoly assuming that the Starter is still a unique period of competition amounts Cournot-Nash. Add the costs of retention to Klemperer (1988) model. The incoming, in order to attract a client, assumes the costs of vendor change incurred the consumer; established firm assumes the costs of retaining to preserve it. We assume a linear demand and marginal costs of both constant firms. The results of the work are important for the analysis of the implications for social welfare of regulatory policies. We performed a simulation of the theoretical model and confirm relevant outcomes in terms of social, over well-being of the consumer, benefits and amounts in monopoly and duopoly with costs of change and change and retention costs.