Customer Poaching and Brand Switching

TLDR

The abstract has Background, Purpose+Mechanism, Findings. Wait: The instruction: produce exactly one TLDR sentence for each label section that has non-empty content. But we have a line labeled [Purpose, Mechanism] meaning that content belongs to both Purpose and Mechanism. Findings: we have multiple findings sentences.

Abstract

Firms sometimes try to poach the customers of their competitors by offering them inducements to switch. We analyze duopoly poaching under both short-term and long-term contracts assuming either that each consumer's brand preferences are fixed over time or that preferences are independent over time. With fixed preferences, short-term contracts lead to poaching and socially inefficient switching. The equilibrium with long-term contracts has less switching than when only short-term contracts are feasible, and it involves the sale of both short-term and long-term contracts. With independent preferences, short-term contracts are efficient, but long-term contracts lead to inefficiently little switching.