Upgrades, Tradeins, and Buybacks

Drew Fudenberg and Jean Tirole

RAND Journal of Economics, 1998, vol. 29, issue 2, 235-258

Abstract: We study monopoly pricing of overlapping generations of a durable good. We consider two sorts of goods: those with an active secondhand market and anonymous consumers, such as textbooks, and those with no secondhand market and consumers who can prove that they purchased the old good to qualify for a discount on the new one, such as software. In the first case we show that the monopolist may choose to either produce or repurchase the old good once the new one becomes available. In the latter case we determine when the monopolist chooses to offer upgrade discounts.

Date: 1998
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Working Paper: Upgrades, Trade-Ins and BuyBacks (1997)
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