Does a Second-Hand Market Limit a Durable Goods Monopolist's Market Power?

Meng-Yu Liang ()
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Meng-Yu Liang: Institute of Economics, Academia Sinica, Taipei, Taiwan, https://www.econ.sinica.edu.tw/

No 19-A003, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: Deneckere and Liang (2008) show that Swanís independent result fails when the monopolist cannot commit to a price schedule. The ratio between the rate of depreciation and the discount rate affects monopolist's market power when there is a frictionless secondhand market. This paper analyzes the same underlying model, except that resale is not allowed, and the existence of a second-hand market enlarges the range of parameters for the monopolist equilibrium. The presence of substitutes from the second-hand market after selling to the low valuation consumers may make the freshly release price less competitive in the first place.

Keywords: : durability; market power; second-hand market; Coase Conjecture (search for similar items in EconPapers)
JEL-codes: L12 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-09
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
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