Planned obsolescence and monopoly undersupply
This paper examines the welfare implications of planned obsolescence in situations where the traditional monopoly undersupply exists. We find that the monopolist's introduction of incompatibility between successive generations of products alleviates the monopoly undersupply problem and may therefore generate higher social welfare than compatibility. Paradoxically, the stronger the network effects, the more likely welfare will increase as a result of incompatibility. Our result also extends to two-sided markets characterized by indirect network effects.
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- Jean-Charles Rochet & Jean Tirole, 2014.
"Platform Competition in Two-Sided Markets,"
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- Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers dp409, Financial Markets Group.
- Rochet, Jean-Charles & Tirole, Jean, 2003. "Platform Competition in Two-Sided Markets," IDEI Working Papers 152, Institut d'Économie Industrielle (IDEI), Toulouse.
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- repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
- Miao Chun-Hui, 2009. "Limiting Compatibility in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 8(4), pages 1-19, December.
- Michael Waldman, 1993. "A New Perspective on Planned Obsolescence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 273-283. Full references (including those not matched with items on IDEAS)
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