Concurrent Renting and Selling in a Durable-Goods Monopoly under Threat of Entry
AbstractThis article analyzes the choice of contract (sales or rental) of a durable-goods monopolist facing a threat of future entry. Although in the absence of such a threat a monopolist would prefer to rent his entire output, we show that the threat of entry alters that preference. There is an optimal preentry contract mix, involving both rental and sales. If both firms behave as Cournot duopolists after entry, the optimal choice of preentry contracts enables the erstwhile monopolist to gain the same profits as he would if he behaved as a von Stackelberg leader.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 17 (1986)
Issue (Month): 2 (Summer)
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Web page: http://www.rje.org
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- Andrikopoulos, Athanasios & Markellos, Raphael. N, 2012. "Dynamic interaction between markets for leasing and selling automobiles," MPRA Paper 45225, University Library of Munich, Germany.
- Sagasta Elorza, Amagoia & Usategui Díaz de Otalora, José María, 2012. "Optimal overall emissions taxation in durable goods oligopoly," DFAEII Working Papers DFAEII;2012-18, University of the Basque Country - Department of Foundations of Economic Analysis II.
- Gregory E. Goering, 2012. "Taxation and Durable-Goods Monopoly: Does a Current Tax Influence Firm Behavior?," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 20-28, August.
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