Monopoly Distortions in Durability and Multi-Dimensional Quality

Roland Strausz

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: I show that Swan’s (1970) independence result requires a multiplicative interaction between durability and all other quality attributes. Because there is no compelling argument for a multiplicativity in quality, monopolists tend to distort durability, even with constant marginal costs. Distortions in durability and other quality aspects are aligned exactly when the marginal cost of quality do not increase too much with durability.

Keywords: Durability; quality; monopoly (search for similar items in EconPapers)
Date: 2009-09
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Journal Article: Monopoly distortions in durability and multi-dimensional quality (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:271

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