Quality Differentiation in Durable Goods Monopoly Always Yields Strictly Positive Profits

Didier Laussel (didier.laussel@univ-amu.fr) and Ngo Long

No 9331, CESifo Working Paper Series from CESifo

Abstract: A monopolist producing vertically differentiated durable goods can offer in each period a sequence of price-quality menus to segment the market. We show that, contrary to the Coase conjecture for the homogeneous durable good monopoly, thanks to the ability to produce differentiated durable goods, in all Markov-Perfect Equilibria, the profit of a monopolist that cannot commit to future price-quality menus is bounded below by a strictly positive value independent of the discount factor.

Keywords: product quality; durable good monopoly; second-degree price discrimination; Coase conjecture (search for similar items in EconPapers)
JEL-codes: C73 D42 L12 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Quality differentiation in durable goods monopoly always yields strictly positive profits (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9331

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