The micro-foundations of intertemporal price discrimination
AbstractThis paper investigates the optimality of intertemporal price discrimination for a durable-good monopoly in a model where infinitely-lived households face an intertemporal budget constraint, and consume both durable goods and non-durable goods. We prove that the optimal price of the durable good is not constant, and may decrease or increase over time. Some households may choose to purchase the durable good at a later date, and pay lower or higher prices, since the gain in discounted utility of consuming more of the non-durable good more than compensates for the loss in utility from delaying the consumption of the durable good. Copyright Springer-Verlag Berlin/Heidelberg 2006
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 27 (2006)
Issue (Month): 2 (January)
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- Winston T.H. Koh, 2005. "The Micro-foundations of Intertemporal Price Discrimination," Microeconomics Working Papers 22456, East Asian Bureau of Economic Research.
- Winston T.H. Koh, 2005. "The Micro-foundations of Intertemporal Price Discrimination," Working Papers 04-2005, Singapore Management University, School of Economics.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer, vol. 36(4), pages 333-349, June.
- Melser, Daniel & Syed, Iqbal, 2007. "Life Cycle Pricing and the Measurement of Inflation," MPRA Paper 16722, University Library of Munich, Germany, revised 07 Jul 2008.
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