Faculty of Economics and Business Administration Publications Database

Durable Goods with Quality Differentiation

Volume: 100
Number: 2
Pages: 173 - 177
Month: August
ISSN-Print: 0165-1765
Link External Source: Online Version
Year: 2008
Keywords: Price discrimination; Durable-goods monopolist; Coase conjecture
Abstract: We study the optimal strategy of a durable-goods monopolist who can offer goods in different qualities. The key finding is that the presence of the additional sorting variable further undermines the firm''s commitment problem, leading to results that contrast sharply with those of standard durable-goods models or those of models where the firm can commit.