IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/20328.html
   My bibliography  Save this paper

Consumer myopia, compatibility and aftermarket monopolization

Author

Listed:
  • Miao, Chun-Hui

Abstract

In this paper, I show that the standard Bertrand competition argument does not apply when firms compete for myopic consumers who optimize period-by-period. I develop the model in the context of aftermarket. With overlapping-generations of consumers, simultaneous product offerings in the primary market and aftermarket establishes a price floor for the primary good. This constraint prevents aftermarket rents from being dissipated by the primary market competition. Duopoly firms earn positive profits despite price competition with undifferentiated products. Nonetheless, government interventions to reinforce aftermarket competition such as a standardization requirement may lead to the partial collapse of the primary market.

Suggested Citation

  • Miao, Chun-Hui, 2005. "Consumer myopia, compatibility and aftermarket monopolization," MPRA Paper 20328, University Library of Munich, Germany, revised 2009.
  • Handle: RePEc:pra:mprapa:20328
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/20328/1/MPRA_paper_20328.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    aftermarket; Bertrand competition; bounded rationality; standardization.;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20328. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.