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Using a Soft Deadline to Counter Monopoly

Author

Listed:
  • Masahiro Yoshida

    (Faculty of Political Science and Economics, Waseda University)

Abstract

A monopolist often exploits a hard deadline to raise their commitment power. I explore whether a group of buyers can employ a soft deadline to counter the monopoly. Using a simple durable goods monopolist model under a deadline, I show that the buyers’ imperfect commitment to an earlier exit may elicit a compromise from the monopolist and generate the buyers’ premium. The soft deadline partially restores the self-competition dynamics of Coase conjecture, which is previously constrained by the hard deadline. Only one soft deadline breaks the conventional link between the time horizon (or durability of goods) and monopoly power.

Suggested Citation

  • Masahiro Yoshida, 2023. "Using a Soft Deadline to Counter Monopoly," Working Papers 2305, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2305
    as

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    References listed on IDEAS

    as
    1. Olivier Compte & Philippe Jehiel, 2002. "On the Role of Outside Options in Bargaining with Obstinate Parties," Econometrica, Econometric Society, vol. 70(4), pages 1477-1517, July.
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    Keywords

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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