IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v50y2002i1p43-56.html
   My bibliography  Save this article

Strategic Vertical Differentiation and Durable Goods Monopoly

Author

Listed:
  • Lisa N. Takeyama

Abstract

This paper considers a novel and strategic use of quality as a means for solving the durable‐goods time inconsistency problem. It demonstrates how durable‐goods producers can exploit the cannibalization of high‐quality markets by low‐quality goods. Relative to the static product line solution, this strategic dimension of quality choice implies higher quality levels of low‐end goods and the production of some low‐end products that would not otherwise be produced. In some cases, low‐end goods may rationally be sold below cost. The paper, therefore, offers a purely Coasian explanation for vertical product differentiation.

Suggested Citation

  • Lisa N. Takeyama, 2002. "Strategic Vertical Differentiation and Durable Goods Monopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 43-56, March.
    • Handle: RePEc:bla:jindec:v:50:y:2002:i:1:p:43-56
    DOI: 10.1111/1467-6451.00167
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-6451.00167
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-6451.00167?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali K. Parlaktürk, 2012. "The Value of Product Variety When Selling to Strategic Consumers," Manufacturing & Service Operations Management, INFORMS, vol. 14(3), pages 371-385, July.
    2. Beccuti, Juan & Möller, Marc, 2021. "Screening by mode of trade," Games and Economic Behavior, Elsevier, vol. 129(C), pages 400-420.
    3. Jong‐Hee Hahn, 2006. "Damaged durable goods," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 121-133, March.
    4. Inderst, Roman, 2008. "Durable goods with quality differentiation," Economics Letters, Elsevier, vol. 100(2), pages 173-177, August.
    5. Didier Laussel & Ngo Long & Joana Resende, 2022. "Asymmetric Information and Differentiated Durable Goods Monopoly: Intra-Period Versus Intertemporal Discrimination," Dynamic Games and Applications, Springer, vol. 12(2), pages 574-607, June.
    6. Jong-Hee Hahn, 2004. "Durable Goods Monopoly with Endogenous Quality," Econometric Society 2004 Far Eastern Meetings 665, Econometric Society.
    7. Buehler, Stefan & Eschenbaum, Nicolas, 2021. "Dynamic Monopoly Pricing With Multiple Varieties: Trading Up," Economics Working Paper Series 2113, University of St. Gallen, School of Economics and Political Science.
    8. Gergely Csorba & Jong‐Hee Hahn, 2006. "Functional Degradation And Asymmetric Network Effects," Journal of Industrial Economics, Wiley Blackwell, vol. 54(2), pages 253-268, June.
    9. Basak Altan, 2020. "Dynamic Durable Goods Monopoly and Market Power," Games, MDPI, vol. 11(2), pages 1-14, May.
    10. Laussel, Didier & Long, Ngo Van & Resende, Joana, 2020. "Quality and price personalization under customer recognition: A dynamic monopoly model with contrasting equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).
    11. Christophe Faugere & Giri Kumar Tayi, 2003. "Designing Free Sofware for Marketing: A Game Theoretic Approach," Game Theory and Information 0311003, University Library of Munich, Germany.
    12. Chih-yi Chi, Woody & Wu, Shufen, 2006. "Intertemporal quality discrimination of a durable good monopolist," Economics Letters, Elsevier, vol. 92(2), pages 184-191, August.
    13. Brzustowski, Thomas & Georgiadis Harris, Alkis & Szentes, Balázs, 2023. "Smart contracts and the Coase conjecture," LSE Research Online Documents on Economics 117950, London School of Economics and Political Science, LSE Library.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:50:y:2002:i:1:p:43-56. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.