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 Singapore Management University, School of Economics in its series Working Papers with number 05-2005.
Length: 23 pages
Date of creation: Mar 2005
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
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," Microeconomics Working Papers 22455, East Asian Bureau of Economic Research.
- D40 - Microeconomics - - Market Structure and Pricing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-30 (All new papers)
- NEP-COM-2006-09-30 (Industrial Competition)
- NEP-MIC-2006-09-30 (Microeconomics)
- NEP-NET-2006-09-30 (Network Economics)
- NEP-SEA-2006-09-30 (South East Asia)
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