Planned obsolescence and monopoly undersupply
AbstractThis paper examines the welfare implications of planned obsolescence in situations where the traditional monopoly undersupply exists. We find that the monopolist's introduction of incompatibility between successive generations of products alleviates the monopoly undersupply problem and may therefore generate higher social welfare than compatibility. Paradoxically, the stronger the network effects, the more likely welfare will increase as a result of incompatibility. Our result also extends to two-sided markets characterized by indirect network effects.
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Bibliographic InfoArticle provided by Elsevier in its journal Information Economics and Policy.
Volume (Year): 23 (2011)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/505549
Compatibility Monopoly undersupply Planned obsolescence;
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