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," Working Papers 04-2005, Singapore Management University, School of Economics.
- Winston T.H. Koh, 2005. "The Micro-foundations of Intertemporal Price Discrimination," Microeconomics Working Papers 22456, East Asian Bureau of Economic Research.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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