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Differentiated durable goods monopoly: a robust Coase conjecture

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  • Nava, Francesco
  • Schiraldi, Pasquale

Abstract

The paper analyzes a durable goods monopoly problem in which multiple varieties can be sold. A robust Coase conjecture establishes that the market eventually clears, with profits exceeding static optimal market-clearing profits and converging to this lower bound in all stationary equilibria with instantaneous price revisions. Pricing need not be efficient, nor is it minimal (equal to the maximum of marginal cost and minimal value), and can lead to cross-subsidization. Conclusions nest both classical Coasian insights and modern Coasian failures. The option to scrap products does not affect results qualitatively, but delivers a novel motive for selling high cost products.

Suggested Citation

  • Nava, Francesco & Schiraldi, Pasquale, 2019. "Differentiated durable goods monopoly: a robust Coase conjecture," LSE Research Online Documents on Economics 90512, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:90512
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    File URL: http://eprints.lse.ac.uk/90512/
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    References listed on IDEAS

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    Cited by:

    1. Stefan Buehler & Nicolas Eschenbaum, 2021. "Dynamic Monopoly Pricing With Multiple Varieties: Trading Up," Papers 2108.07146, arXiv.org, revised Dec 2021.
    2. Heinrich Ursprung & Katarina Zigova, 2021. "The Ultimate Coasian Commitment: Estimating and Explaining Artist-Specific Death Effects," Working Papers CEB 21-013, ULB -- Universite Libre de Bruxelles.
    3. Laussel, Didier & Long, Ngo Van & Resende, Joana, 2020. "Quality and price personalization under customer recognition: A dynamic monopoly model with contrasting equilibria," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).
    4. Laura Doval & Vasiliki Skreta, 2019. "Optimal mechanism for the sale of a durable good," Papers 1904.07456, arXiv.org, revised May 2021.
    5. Chang, Dongkyu & Lee, Jong Jae, 2022. "Price skimming: Commitment and delay in bargaining with outside option," Journal of Economic Theory, Elsevier, vol. 205(C).
    6. Markus Dertwinkel‐Kalt & Mats Köster, 2022. "Attention to online sales: The role of brand image concerns," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(1), pages 64-89, February.
    7. Didier Laussel & Ngo Long & Joana Resende, 2022. "Asymmetric Information and Differentiated Durable Goods Monopoly: Intra-Period Versus Intertemporal Discrimination," Dynamic Games and Applications, Springer, vol. 12(2), pages 574-607, June.
    8. Fabio Antoniou & Raffaele Fiocco, 2023. "Storable Good Market With Intertemporal Cost Variations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 361-385, February.
    9. S. Nageeb Ali & Navin Kartik & Andreas Kleiner, 2022. "Sequential Veto Bargaining with Incomplete Information," Papers 2202.02462, arXiv.org, revised Apr 2023.

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    More about this item

    Keywords

    Coase conjecture; monopoly; product design; dynamic pricing;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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