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Intertemporal Self-Selection with Multiple Buyers

Author

Listed:
  • Bagnoli, Mark
  • Salant, Stephen W
  • Swierzbinski, Joseph E

Abstract

We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer items of different quality at the same time to induce buyers to self-select, as in Mussa-Rosen (1978), but is not artificially constrained to offer only one such menu. Instead the seller can offer without precommitment a sequence of menus over time. In the two-buyer case where the seller has complete information about each buyer's marginal valuation for quality, the seller's profits exceed what can be obtained from a single menu and sometimes approximate the profits of a perfectly discriminating monopolist. In companion papers (Bagnoli et al., 1990, 1992), we show that these conclusions continue to hold (1) in the infinite-horizon case with any finite number of buyers and (2) in two-period examples where the seller has incomplete information about buyer preferences.

Suggested Citation

  • Bagnoli, Mark & Salant, Stephen W & Swierzbinski, Joseph E, 1995. "Intertemporal Self-Selection with Multiple Buyers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(3), pages 513-526, May.
    • Handle: RePEc:spr:joecth:v:5:y:1995:i:3:p:513-26
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    Cited by:

    1. 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.
    2. Jong‐Hee Hahn, 2006. "Damaged durable goods," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 121-133, March.
    3. 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.
    4. Walter Beckert, 2004. "Dynamic Monopolies with Stochastic Demand," Birkbeck Working Papers in Economics and Finance 0404, Birkbeck, Department of Economics, Mathematics & Statistics.
    5. Hamilton, Jonathan & Slutsky, Steven, 2004. "Nonlinear price discrimination with a finite number of consumers and constrained recontracting," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 737-757, June.
    6. Jong-Hee Hahn, 2004. "Durable Goods Monopoly with Endogenous Quality," Econometric Society 2004 Far Eastern Meetings 665, Econometric Society.

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