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Household Demand, Network Externality Effects and Intertemporal Price Discrimination

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  • Winston T.H. Koh

    () (School of Economics and Social Sciences, Singapore Management University)

Abstract

This paper examines the optimality of intertemporal price discrimination when network externality effects are present in the consumption of a durable good. We conduct our study in two settings. In a model with two household types, utilities are dependent on the cumulative proportion of households that have purchased the durable good. Next, in a model with a continuum of household types, we extend the analysis to the case where households consume both a durable good and a stream of non-durable goods. We show that in both settings, the presence of network externalities facilitates a sales strategy with intertemporal price discrimination.

Suggested Citation

  • Winston T.H. Koh, 2005. "Household Demand, Network Externality Effects and Intertemporal Price Discrimination," Working Papers 05-2005, Singapore Management University, School of Economics.
  • Handle: RePEc:siu:wpaper:05-2005
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    References listed on IDEAS

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    More about this item

    Keywords

    intertemporal price discrimination; durable good; household demand; network externality;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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