Intertemporal Price Discrimination in Frictionless Durable Goods Monopolies
AbstractThe author shows that small differences in quality and production costs between durables and nondurables in a product line allow a durable goods monopolist to intertemporally price discriminate even with continuous trading. In particular, a monopolist would want to both sell and rent out a durable to achieve price discrimination. This incentive to price discriminate simultaneously creates inefficient delay in the sale of the durable good, a finite trading period, and long-run efficiency of the market. The Coase conjecture fails because the nondurable good acts as an outside option that guarantees a minimum profit in the market for durables. Copyright 1998 by Blackwell Publishing Ltd
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 46 (1998)
Issue (Month): 1 (March)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
Other versions of this item:
- Kuhn, K-U, 1996. "Intertemporal Price Discrimination in Frictionless Durable Goods Monopolies," UFAE and IAE Working Papers 352.96, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
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- Goering, Gregory E., 2007. "Durability choice with differentiated products," Research in Economics, Elsevier, vol. 61(2), pages 105-112, June.
- Eric Avenel & Sebastien Mitraille, 2004.
"Strategic Delays of Delivery, Market Separation and Demand Discrimination,"
The Centre for Market and Public Organisation
04/112, Department of Economics, University of Bristol, UK.
- Mitraille, Sebastien & Eric Avenel, 2003. "Strategic delays of delivery, market separation and demand discrimination," Royal Economic Society Annual Conference 2003 155, Royal Economic Society.
- Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer, vol. 36(4), pages 333-349, June.
- Kim, Jae-Cheol & Kim, Min-Young & Chun, Se-Hak, 2014. "Property tax and its effects on strategic behavior of leasing and selling for a durable-goods monopolist," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 132-144.
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