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Replacement Cycles, Income Distribution, and Dynamic Price Discrimination

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  • Eduardo Correia de Souza
  • Jorge Chami Batista

Abstract

This paper analyses how income distribution, Intellectual Property Rights and other regulatory policies such as minimum quality standards determine pricing strategies in a dynamic context where a monopolist periodically introduces new generations or upgrades of a durable good. This paper differs from Inderst’s (2003) or Koh’s (2006) in that discrimination through quality and screening take place in a context where consumers buy several (not a single) versions of the durable good during a lifetime. It differs from Glass (2001) in that here an equilibrium may emerge in which different consumer types replace their durable generations with different frequencies. Our model’s predictions or stylised facts are illustrated with data from the last Brazilian POF (household budget survey).

Suggested Citation

  • Eduardo Correia de Souza & Jorge Chami Batista, 2014. "Replacement Cycles, Income Distribution, and Dynamic Price Discrimination," Business and Economics Working Papers 197, Unidade de Negocios e Economia, Insper.
  • Handle: RePEc:aap:wpaper:197
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