scholarly journals Differentiated Durable Goods Monopoly: A Robust Coase Conjecture

2018 ◽  
Author(s):  
Francesco Nava ◽  
Pasquale Schiraldi
Keyword(s):  
Durable Goods ◽  
Durable Goods Monopoly ◽  
Coase Conjecture

scholarly journals Differentiated Durable Goods Monopoly: A Robust Coase Conjecture

2019 ◽  
Vol 109 (5) ◽  
pp. 1930-1968 ◽  
Author(s):  
Francesco Nava ◽  
Pasquale Schiraldi
Keyword(s):  
Lower Bound ◽  
Marginal Cost ◽  
Durable Goods ◽  
Market Clearing ◽  
Durable Goods Monopoly ◽  
Coase Conjecture ◽  
Cross Subsidization

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. (JEL C78, D42, L12)

scholarly journals Pricing strategy in the context of durable goods monopoly with discrete demand

2015 ◽  
Vol 60 (204) ◽  
pp. 61-73
Author(s):  
Paulo Nunes
Keyword(s):  
Willingness To Pay ◽  
Interest Rates ◽  
Low Income ◽  
Durable Goods ◽  
Pricing Strategy ◽  
Durable Good ◽  
Durable Goods Monopoly ◽  
Coase Conjecture ◽  
Low Incomes ◽  
The Difference

Considering a model of discrete demand with two consumers, this article shows that irrespective of the difference between the willingness to pay of consumers with high and low incomes, if interest rates are low, a durable goods monopolist has an advantage in discriminating prices over time. If the difference in willingness to pay is limited and interest rates high, the monopolist has an advantage in setting a price equal to the low-income consumer?s willingness to pay. Finally, in the case of great difference in willingness to pay and high interest rates, the monopolist has an advantage in setting a price equal to the high-income consumer?s willingness to pay, and not selling the durable good to the low-income consumer. The results show that the Coase conjecture can fail if the difference in willingness to pay is great, and interest rates are high.

scholarly journals Durable goods monopoly with stochastic costs

2017 ◽  
Vol 12 (2) ◽  
pp. 817-861 ◽  
Author(s):  
Juan Ortner
Keyword(s):  
Durable Goods ◽  
Durable Goods Monopoly

scholarly journals Dynamic Durable Goods Monopoly and Market Power

Games ◽  
2020 ◽  
Vol 11 (2) ◽  
pp. 22
Author(s):  
Basak Altan
Keyword(s):  
Market Power ◽  
Discrete Time ◽  
Durable Goods ◽  
Infinite Horizon ◽  
Monopoly Power ◽  
Durable Good ◽  
Durable Goods Monopoly ◽  
Markov Perfect

We analyze a vertically differentiated market for an imperfectly durable good served by a monopolist in an infinite-horizon, discrete-time game. Our goal is to identify the Markov perfect stationary equilibria where the seller can maintain his monopoly power. We establish that the set of parameters supporting a monopoly outcome is larger when the seller offers different quality versions of the same product. Hence, our results suggest that, when the innate durability of a product is high, the seller should offer different quality versions of the product.

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