Durable-Goods Monopoly, Increasing Marginal Cost and Depreciation
AbstractThis paper combines increasing marginal cost and depreciation in a continuous-time model of a durable-goods monopolist. In contrast to the case of increasing marginal cost but no depreciation (analyzed by C. Kahn) and the case of depreciation with constant marginal cost (analyzed by E. Bond and L. Samuelson), steady-state output in this model is less than in the competitive case. A turnpike result shows that choice of a long enough time horizon can make the equilibrium path of output in a finite-horizon game arbitrarily close to the path of the infinite-horizon game. Copyright 1997 by The London School of Economics and Political Science
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 64 (1997)
Issue (Month): 253 (February)
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- John Boyce & Jeffrey Robert Church & Lucia Vojtassak, 2012. "Capacity Constraints in Durable Goods Monopoly: Coase and Hotelling," Working Papers 2012-07, Department of Economics, University of Calgary, revised 08 Aug 2012.
- Jun-ichi Itaya & Heinrich Ursprung, 2008. "Price and Death," CESifo Working Paper Series 2213, CESifo Group Munich.
- Driskill, Robert, 2001. "Durable goods oligopoly," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 391-413, March.
- Fethke, Gary & Jagannathan, Raj, 2000. "Why would a durable good monopolist also produce a cost-inefficient nondurable good?," International Journal of Industrial Organization, Elsevier, vol. 18(5), pages 793-812, July.
- Karp, Larry, 1996.
"Depreciation erodes the Coase Conjecture,"
European Economic Review,
Elsevier, vol. 40(2), pages 473-490, February.
- Karp, L., 1992. "Depreciation erodes the coase conjecture," Discussion Paper Series In Economics And Econometrics 9210, Economics Division, School of Social Sciences, University of Southampton.
- Karp, Larry, 1995. "Depreciation Erodes the Coase Conjecture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt1fs6j5nn, Department of Agricultural & Resource Economics, UC Berkeley.
- Fethke, Gary & Jagannathan, Raj, 2002. "Monopoly with endogenous durability," Journal of Economic Dynamics and Control, Elsevier, vol. 26(6), pages 1009-1027, June.
- Gregory Goering & Michael Pippenger, 2009. "Exchange Rates and Concurrent Leasing and Selling in Durable-Goods Monopoly," Atlantic Economic Journal, International Atlantic Economic Society, vol. 37(2), pages 187-196, June.
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