Regret in Durable-Good Monopoly

Rumen Kostadinov
Authors registered in the RePEc Author Service: Bradley Ruffle

Department of Economics Working Papers from McMaster University

Abstract: I study a dynamic model of durable-good monopoly where a seller minimises lifetime regret against the worst-case type of buyer. The optimal mechanism is time-consistent: at no point can the seller benefit from replacing it with another mechanism. Despite this, the optimal mechanism cannot be supported in equilibrium. This is because the seller’s regret is endogenously determined by the best counterfactual payoffs he can obtain against every type, and these payoffs vary with his commitment power. The good may not be sold to all types in equilibrium. Nevertheless, in the limit as offers become frequent the good is sold immediately at a price equal to the lowest buyer value.

Keywords: durable-good monopoly; Coase conjecture; regret (search for similar items in EconPapers)
JEL-codes: C73 D81 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2025-02
New Economics Papers: this item is included in nep-des, nep-exp and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://socialsciences.mcmaster.ca/econ/rsrch/papers/archive/2024-02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2025-02

Access Statistics for this paper

More papers in Department of Economics Working Papers from McMaster University Contact information at EDIRC.
Bibliographic data for series maintained by ().