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.
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Bibliographic InfoPaper provided by Singapore Management University, School of Economics in its series Working Papers with number 04-2005.
Length: 19 pages
Date of creation: Jan 2005
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Other versions of this item:
- Winston Koh, 2006. "The micro-foundations of intertemporal price discrimination," Economic Theory, Springer, vol. 27(2), pages 393-410, January.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-30 (All new papers)
- NEP-MIC-2006-09-30 (Microeconomics)
- NEP-SEA-2006-09-30 (South East Asia)
- NEP-UPT-2006-09-30 (Utility Models & Prospect Theory)
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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- 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.
- Eduardo Correia de Souza & Jorge Chami Batista, 2007. "Replacement Cycles, Income Distribution, And Dynamic Price Discrimination," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 019, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Hikmet Gunay, 2013. "Waiting For Signalling Quality," ISER Discussion Paper 0877, Institute of Social and Economic Research, Osaka University.
- Iqbal Syed & Daniel Melser, 2008. "Prices over the Product Life Cycle: An Empirical Analysis," Discussion Papers 2008-25, School of Economics, The University of New South Wales.
- Souza, Eduardo Correia de & Batista, Jorge Chami, 2014. "Replacement Cycles, Income Distribution, and Dynamic Price Discrimination," Insper Working Papers wpe_331, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
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