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Dynamic Monopoly Pricing and Herding Author info | Abstract | Publisher info | Download info | Related research | Statistics Bose, Subir
Orosel, Gerhard O
Ottaviani, Marco
Vesterlund, Lise
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This paper studies dynamic pricing by a monopolist selling to buyers who learn from each other’s purchases. The price posted in each period serves to extract rent from the current buyer, as well as to control the amount of information transmitted to future buyers. As information increases future rent extraction, the monopolist has an incentive to subsidize learning by charging a price that results in information revelation. Nonetheless in the long run, the monopolist generally induces herding by either selling to all buyers or exiting the market.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
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Date of creation: Apr 2005Date of revision:
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Keywords: herd behaviour ; informational cascade ; monopoly ; public information ; social learning ; Find related papers by JEL classification: D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
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references Cited by : (explanations , 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.)
Subir Bose & Gerhard Orosel & Marco Ottaviani & Lise Vesterlund, 2008.
"Monopoly pricing in the binary herding model ,"
Economic Theory ,
Springer, vol. 37(2), pages 203-241, November.
[Downloadable!] (restricted)
Philipp Kircher & Andrew Postlewaite, 2008.
"Strategic Firms and Endogenous Consumer Emulation ,"
PIER Working Paper Archive
08-003, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
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