Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/189316
Authors: 
Lipman, Barton
Wang, Ruqu
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1032
Abstract: 
We show that small switching costs can have surprisingly dramatic effects in infinitely repeated games if these costs are large relative to payoffs in a single period. This shows that the results in Lipman and Wang [2000] do have analogs in the case of infinitely repeated games. We also discuss whether the results here or those in Lipman and Wang [2000] imply a discontinuity in the equilibrium outcome correspondence with respect to small switching costs. We conclude that there is not a discontinuity with respect to switching costs but that the switching costs do create a discontinuity with respect to the length of a period.
Subjects: 
infinite horizon
repeated games
switching costs
Folk Theorem
JEL: 
C72
Document Type: 
Working Paper

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