The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Sep, 1984, Volume 52, Issue 5
https://doi.org/0012-9682(198409)52:5<1085:TCOS>2.0.CO;2-Y
p. 1085-1116
C. Christian von Weizsacker
The lecture investigates some consequences of a frequently observed phenomenon: There are once and for all costs of switching from one good to one of its substitutes. The decision to substitute then is an investment decision. Such substitution costs, in conjunction with problems of oppportunism, have frequently been seen as a reason for vertical integration. Reputation for a fair treatment of customers may enable suppliers to maintain market relations for goods involving substitution costs. A model looks at "competitive distance" between two goods with substitution costs. If future tastes are uncertain the model shows that with low rates of discount or high rates of market growth competitive distance declines as substitution costs rise. It is also shown that competitive distance rises with a rising rate of discount. Given the effectiveness of the reputation mechanism, numerical analysis shows that competitive distance is smaller in most cases with substitution costs than without substitution costs.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
