IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v27y2006i2p393-410.html

The micro-foundations of intertemporal price discrimination

Author

Listed:
  • Winston Koh

Abstract

This 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. Copyright Springer-Verlag Berlin/Heidelberg 2006

Suggested Citation

  • Winston Koh, 2006. "The micro-foundations of intertemporal price discrimination," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(2), pages 393-410, January.
    • Handle: RePEc:spr:joecth:v:27:y:2006:i:2:p:393-410
    DOI: 10.1007/s00199-005-0599-4
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00199-005-0599-4
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00199-005-0599-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qu, Zhan & Raff, Horst & Schmitt, Nicolas, 2018. "Incentives through inventory control in supply chains," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 486-513.
    2. Eduardo Correia de Souza & Jorge Chami Batista, 2015. "Replacement cycles, income distribution and dynamic price discrimination," Applied Economics, Taylor & Francis Journals, vol. 47(31), pages 3292-3310, July.
    3. Daniel Melser & Iqbal A. Syed, 2016. "Life Cycle Price Trends and Product Replacement: Implications for the Measurement of Inflation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 509-533, September.
    4. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    5. Artyom Shneyerov, 2014. "An optimal slow Dutch auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 57(3), pages 577-602, November.
    6. 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.
    7. 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.
    8. Daniel Melser & Iqbal A. Syed, 2017. "The product life cycle and sample representativity bias in price indexes," Applied Economics, Taylor & Francis Journals, vol. 49(6), pages 573-586, February.
    9. Hikmet Gunay, 2014. "Waiting for Signaling Quality," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 364-386, October.
    10. 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.
    11. Runco Mariano G, 2010. "A Note on the Multidimensional Monopolist Problem and Intertemporal Price Discrimination," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-8, August.
    12. Lou, Weifang & Prentice, David & Yin, Xiangkang, 2012. "What difference does dynamics make? The case of digital cameras," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 30-40.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:27:y:2006:i:2:p:393-410. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.