We consider a two-period model in which duopolists sell experience goods and practice behavior-based price discrimination (BBPD). We give general conditions for when firms should offer a lower price to existing customers (`pay-to-stay') or to new customers (`pay-to-switch'). We also demonstrate that unlike previous results, BBPD may intensify competition in the first period but weaken it in the second.
Economics Letters, Elsevier, vol. 118, n. 1, January 2013, pp. 155–158