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The Coase problem: a transformation of the usual utility function

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  • Paulo Macas Nunes

Abstract

Given that demand for durable goods is not constant over time, this article proposes a transformation of the utility function which accounts for discontinuous time and for the effect of different levels of income on the utility of buying. As a result, the original Coase paradox will collapse. The smaller the difference between the disposition of consumers with high level income and those with low level income to pay, the greater the probability of marginal cost pricing in the present.

Suggested Citation

  • Paulo Macas Nunes, 2006. "The Coase problem: a transformation of the usual utility function," Applied Economics Letters, Taylor & Francis Journals, vol. 13(7), pages 427-429.
  • Handle: RePEc:taf:apeclt:v:13:y:2006:i:7:p:427-429
    DOI: 10.1080/13504850500396363
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    References listed on IDEAS

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    1. Sobel, Joel, 1991. "Durable Goods Monopoly with Entry of New Consumers," Econometrica, Econometric Society, vol. 59(5), pages 1455-1485, September.
    2. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
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    Cited by:

    1. Paulo Maçãs Nunes, 2015. "Pricing Strategy In The Context Of Durable Goods Monopoly With Discrete Demand," Economic Annals, Faculty of Economics, University of Belgrade, vol. 60(204), pages 61-74, January –.

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