The finite horizon, undiscounted, durable goods monopoly problem with finitely many consumers

Gerardo Berbeglia, Peter Sloan and Adrian Vetta

Journal of Mathematical Economics, 2019, vol. 82, issue C, 171-183

Abstract: We study the uncommitted durable goods monopoly problem when there are finitely many consumers, a finite horizon, and no discounting. In particular we characterize the set of strong-Markov subgame perfect equilibria that satisfy the skimming property. We show that in any such equilibrium the profits are not less than static monopoly profits; and at most the static monopoly profits plus the monopoly price. When each consumer is small relative to the market, profits are then approximately the same as those of a static monopolist which sets a single price. Finally, we extend the equilibrium characterization to games with an arbitrary discount factor.

Keywords: Durable goods monopoly; Discrete buyers; Profit bounds; Inter-temporal price discrimination; Skimming property (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:82:y:2019:i:c:p:171-183

DOI: 10.1016/j.jmateco.2018.11.002

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