Given that demand for durable goods is not constant over time, we propose in this article a transformation of the utility function, which accounts for discrete time and for the effect of different levels of income in the utility of buying. With this, the original Coase paradox will collapse. The smaller the difference of the reservation prices between high income level and low income level consumers, the higher the probability of marginal cost pricing in the present.
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Paper provided by EconWPA in its series Microeconomics with number
0303003.
Length: 6 pages Date of creation: 12 Mar 2003 Date of revision: Handle: RePEc:wpa:wuwpmi:0303003
Note: Type of Document - Tex/WordPerfect/Handwritten; prepared on IBM PC - PC-TEX/UNIX Sparc TeX; to print on HP/PostScript/Franciscan monk; pages: 6 ; figures: included/request from author/draw your own Contact details of provider: Web page: http://129.3.20.41
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