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Competition for Migrating Customers: A Game-Theoretic Analysis in a Regulated Regime

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Executive Summary

Migration processes of customers between alternative providers are becoming more and more relevant. Providers competing for migrating customers may adopt a delaying strategy to retain customers who are willing to leave, facing regulatory sanctions for that unfair behaviour. The contribution of this paper is to propose a game-theoretic model to describe the resulting competition among providers. For that model, both stable and unstable Nash equilibria are shown to exist and the providers' equilibrium strategies can be derived, in general numerically. In the stable equilibrium case the delaying strategy predicted by the model introduces a mean delay that is a strongly nonlinear (decaying) function of the sanction value.

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