Optimal priority pricing by a durable goods monopolist

Joao Correia-da-Silva

Games and Economic Behavior, 2021, vol. 129, issue C, 310-328

Abstract: A durable goods monopolist proposes selling mechanisms in two periods, being unable to commit in the first period on the mechanism to propose in the second. Trade is anonymous and resale is not possible. Although buyers have a continuum of possible valuations, the optimal first-period mechanism is a menu with at most two possibilities: a high price guaranteeing delivery and a low price subject to rationing. This characterization is robust to the arrival of additional buyers in the second period. The optimal mechanism is fully characterized for linear demand, with priority pricing being optimal if agents are sufficiently patient.

Keywords: Priority pricing; Coase conjecture; Durable goods monopoly (search for similar items in EconPapers)
JEL-codes: D42 D82 L12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:129:y:2021:i:c:p:310-328

DOI: 10.1016/j.geb.2021.06.005

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