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Differentiated Durable Goods Monopoly: A Robust Coase Conjecture

Author

Listed:
  • Francesco Nava
  • Pasquale Schiraldi

Abstract

The paper analyzes a durable goods monopoly problem in which multiple varieties can be sold. A robust Coase conjecture establishes that the market eventually clears, with profits exceeding static optimal market-clearing profits and converging to this lower bound in all stationary equilibria with instantaneous price revisions. Pricing need not be efficient, nor is it minimal (equal to the maximum of marginal cost and minimal value), and can lead to cross-subsidization. Conclusions nest both classical Coasian insights and modern Coasian failures. The option to scrap products does not affect results qualitatively, but delivers a novel motive for selling high cost products.

Suggested Citation

  • Francesco Nava & Pasquale Schiraldi, 2019. "Differentiated Durable Goods Monopoly: A Robust Coase Conjecture," American Economic Review, American Economic Association, vol. 109(5), pages 1930-1968, May.
    • Handle: RePEc:aea:aecrev:v:109:y:2019:i:5:p:1930-68
    Note: DOI: 10.1257/aer.20160404
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    Cited by:

    1. You-hua Chen & Zhuang Zhang & Ashok K. Mishra, 2023. "A flexible and efficient hybrid agricultural subsidy design for promoting food security and safety," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    2. Stefan Buehler & Nicolas Eschenbaum & Severin Lenhard, 2021. "Dynamic Monopoly Pricing With Multiple Varieties: Trading Up," Papers 2108.07146, arXiv.org, revised Jul 2025.
    3. Heinrich Ursprung & Katarina Zigova, 2021. "The Ultimate Coasian Commitment: Estimating and Explaining Artist-Specific Death Effects," Working Papers CEB 21-013, ULB -- Universite Libre de Bruxelles.
    4. Doval, Laura & Skreta, Vasiliki, 2024. "Optimal mechanism for the sale of a durable good," Theoretical Economics, Econometric Society, vol. 19(2), May.
    5. Francesc Dilmé, 2024. "Bargaining with Binary Private Information," ECONtribute Discussion Papers Series 284, University of Bonn and University of Cologne, Germany.
    6. Laussel, Didier & Long, Ngo Van & Resende, Joana, 2020. "Quality and price personalization under customer recognition: A dynamic monopoly model with contrasting equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).
    7. Brzustowski, Thomas & Georgiadis Harris, Alkis & Szentes, Balázs, 2023. "Smart contracts and the Coase conjecture," LSE Research Online Documents on Economics 117950, London School of Economics and Political Science, LSE Library.
    8. S. Nageeb Ali & Navin Kartik & Andreas Kleiner, 2023. "Sequential Veto Bargaining With Incomplete Information," Econometrica, Econometric Society, vol. 91(4), pages 1527-1562, July.
    9. Tim Groseclose, 2025. "The Coase Conjecture When the Monopolist and Customers have Different Discount Rates," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 66(3), pages 349-365, March.
    10. Chang, Dongkyu & Lee, Jong Jae, 2022. "Price skimming: Commitment and delay in bargaining with outside option," Journal of Economic Theory, Elsevier, vol. 205(C).
    11. Markus Dertwinkel‐Kalt & Mats Köster, 2022. "Attention to online sales: The role of brand image concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 64-89, February.
    12. Didier Laussel & Ngo Long & Joana Resende, 2022. "Asymmetric Information and Differentiated Durable Goods Monopoly: Intra-Period Versus Intertemporal Discrimination," Dynamic Games and Applications, Springer, vol. 12(2), pages 574-607, June.
    13. Fabio Antoniou & Raffaele Fiocco, 2023. "Storable Good Market With Intertemporal Cost Variations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 361-385, February.
    14. Rumen Kostadinov, 2025. "Regret in Durable-Good Monopoly," Department of Economics Working Papers 2024-02, McMaster University.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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