Monopoly Distortions in Durability and Multi-Dimensional Quality
I show that Swanâ€™s (1970) independence result requires a multiplicative interaction between durability and all other quality attributes. Because there is no compelling argument for a multiplicativity in quality, monopolists tend to distort durability, even with constant marginal costs. Distortions in durability and other quality aspects are aligned exactly when the marginal cost of quality do not increase too much with durability.
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- Roland Strausz, 2009. "Planned Obsolescence as an Incentive Device for Unobservable Quality," Economic Journal, Royal Economic Society, vol. 119(540), pages 1405-1421, October.
- Inderst, Roman, 2008.
"Durable goods with quality differentiation,"
Elsevier, vol. 100(2), pages 173-177, August.
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- Peter L. Swan, 1970. "Market Structure and Technological Progress: The Influence of Monopoly on Product Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 84(4), pages 627-638.
- Chi, Woody Chih-Yi, 1999. "Quality choice and the Coase problem," Economics Letters, Elsevier, vol. 64(1), pages 107-115, July.
- E. Sieper & P. L. Swan, 1973. "Monopoly and Competition in the Market for Durable Goods," Review of Economic Studies, Oxford University Press, vol. 40(3), pages 333-351.
- E. Kleiman & T. Ophir, 1966. "The Durability of Durable Goods," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 165-178. Full references (including those not matched with items on IDEAS)
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