Arbeitspapier
Asymmetric Information and Differentiated Durable Goods Monopoly: Intra-Period Versus Intertemporal Price Discrimination
A durable good monopolist faces a continuum of heterogeneous customers who make purchase decisions by comparing present and expected price-quality offers. The monopolist designs a sequence of price-quality menus to segment the market. We consider the Markov Perfect Equilibrium (MPE) of a game where the monopolist is unable to commit to future price-quality menus. We obtain the novel results that (a) under certain conditions, the monopolist covers the whole market in the first period (even when a static Mussa-Rosen monopolist would not cover the whole market), because this is a strategic means to convince customers that lower prices would not be offered in future periods, and that (b) this can happen only under the stage-wise Stackelberg leadership assumption (whereby consumers base their expectations on the value of the state variable at the end of the period). Conditions under which MPE necessarily involve sequentially trading are also derived.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 9294
- Classification
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Wirtschaft
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Market Structure, Pricing, and Design: Monopoly
Monopoly; Monopolization Strategies
- Subject
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product quality
durable good monopoly
second-degree price discrimination
Coase conjecture
- Event
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Geistige Schöpfung
- (who)
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Laussel, Didier
Long, Ngo Van
Resende, Joana
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2021
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Laussel, Didier
- Long, Ngo Van
- Resende, Joana
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2021
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