Dynamic Durable Goods Monopoly and Market Power

Basak Altan
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Basak Altan: Department of Economics, Ozyegin University, 34794 Istanbul, Turkey

Games, 2020, vol. 11, issue 2, 1-14

Abstract: We analyze a vertically differentiated market for an imperfectly durable good served by a monopolist in an infinite-horizon, discrete-time game. Our goal is to identify the Markov perfect stationary equilibria where the seller can maintain his monopoly power. We establish that the set of parameters supporting a monopoly outcome is larger when the seller offers different quality versions of the same product. Hence, our results suggest that, when the innate durability of a product is high, the seller should offer different quality versions of the product.

Keywords: durable goods; monopoly; pricing; quality; differentiation (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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