Household Demand, Network Externality Effects and Intertemporal Price Discrimination
AbstractThis paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 22455.
Date of creation: Jan 2005
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Intertemporal price discrimination; durable good; household demand; network externality;
Other versions of this item:
- Winston T. H. Koh, 2005. "Household Demand, Network Externality Effects and Intertemporal Price Discrimination," Journal of Economics, Springer, vol. 84(1), pages 49-69, 02.
- Winston T.H. Koh, 2005. "Household Demand, Network Externality Effects and Intertemporal Price Discrimination," Working Papers 05-2005, Singapore Management University, School of Economics.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
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