The Coase Problem: A Transformation of the Usual Utility Function

Paulo Maçãs
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Paulo Maçãs: University of Beira Interior

Microeconomics from EconWPA

Abstract: Given that demand for durable goods is not constant over time, we propose in this article a transformation of the utility function, which accounts for discrete time and for the effect of different levels of income in the utility of buying. With this, the original Coase paradox will collapse. The smaller the difference of the reservation prices between high income level and low income level consumers, the higher the probability of marginal cost pricing in the present.

Keywords: Utility Function; disutility; durable goods; monopoly. (search for similar items in EconPapers)
JEL-codes: D11 D42 D91 (search for similar items in EconPapers)
Date: 2003-03-12
Note: Type of Document - Tex/WordPerfect/Handwritten; prepared on IBM PC - PC-TEX/UNIX Sparc TeX; to print on HP/PostScript/Franciscan monk; pages: 6 ; figures: included/request from author/draw your own

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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0303003

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