IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/vcontributions.3y2003i1n3.html
   My bibliography  Save this article

Upgrading, Degrading, and Intertemporal Price Discrimination

Author

Listed:
  • Lee Gea M

    (Columbia University)

Abstract

The paper studies monopoly pricing of a vertically differentiated durable good in a two-period model. It provides an explanation for seemingly unusual practice of a firm selling a "degraded good," arguing that the presence of Coasian dynamics may lead to the sale of the degraded good that is not less costly to produce than a high-quality good. The main finding is that when the firm can identify previous customers only if they voluntarily reveal their past purchases, it sells the degraded good along with the high-quality good in the first period. When the firm sells an upgrade of the degraded good, the price of the high-quality good cannot be "too low" in the second period, since otherwise the upgrading customers would pretend to be new customers. Thus the firm can enhance first-period sales while mitigating consumers' incentive to wait until the next period.

Suggested Citation

  • Lee Gea M, 2003. "Upgrading, Degrading, and Intertemporal Price Discrimination," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-33, January.
    • Handle: RePEc:bpj:bejtec:v:contributions.3:y:2003:i:1:n:3
    DOI: 10.2202/1534-5971.1056
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1534-5971.1056
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1534-5971.1056?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Lee, Gea M., 2010. "Optimal collusion with internal contracting," Games and Economic Behavior, Elsevier, vol. 68(2), pages 646-669, March.
    2. Hikmet Gunay, 2014. "Waiting for Signaling Quality," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 364-386, October.

    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:bpj:bejtec:v:contributions.3:y:2003:i:1:n:3. 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: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    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.