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Monopoly distortions in durability and multi-dimensional quality

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  • Strausz, Roland

Abstract

Without a multiplicative interaction between durability and other quality attributes Swan's (1970) independence result is violated, even with constant marginal costs. Subsequent distortions are aligned when the marginal cost of quality does not increase too much with durability.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 105 (2009)
Issue (Month): 3 (December)
Pages: 333-335

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Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:333-335

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Durability Quality Monopoly;

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  1. David Levhari & Yoram Peles, 1973. "Market Structure, Quality and Durability," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 235-248, Spring.
  2. Swan, Peter L, 1970. "Market Structure and Technological Progress: The Influence of Monopoly on Product Innovation," The Quarterly Journal of Economics, MIT Press, vol. 84(4), pages 627-38, November.
  3. Inderst, Roman, 2008. "Durable goods with quality differentiation," Economics Letters, Elsevier, vol. 100(2), pages 173-177, August.
  4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  5. Chi, Woody Chih-Yi, 1999. "Quality choice and the Coase problem," Economics Letters, Elsevier, vol. 64(1), pages 107-115, July.
  6. Sieper, E & Swan, P L, 1973. "Monopoly and Competition in the Market for Durable Goods," Review of Economic Studies, Wiley Blackwell, vol. 40(3), pages 333-51, July.
  7. Roland Strausz, 2009. "Planned Obsolescence as an Incentive Device for Unobservable Quality," Economic Journal, Royal Economic Society, vol. 119(540), pages 1405-1421, October.
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