Eliminating the Market for Secondhand Goods: An Alternative Explanation for Leasing
There are a number of prominent specific instances in which a durable goods manufacturer with significant market power employed a lease-only policy: United Shoe in the market for shoe machinery, (ii) IBM in the market for computers and (iii) Xerox in the market for copiers. The obvious question that arises is, Why would such a firm prefer leasing over selling? In this article the author argues that one role of the lease-only policy was to eliminate the market for secondhand goods. The article formally demonstrates the argument, discusses the relationship between this article and earlier literature on secondhand markets, and discusses the implications for antitrust policy. Copyright 1997 by the University of Chicago.
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