Quality choice, the Coase problem, and a fixed cost function of quality: a note

Tsuyoshi Toshimitsu

Applied Economics Letters, 2005, vol. 12, issue 7, 453-455

Abstract: Chi (1999) shows that the durable-good monopolist facing the Coase problem not only over-supplies, but decreases the price per unit of quality, so that the high-demanded consumers do not postpone their purchase. The results derived by Chi are re-examined in the case of a fixed cost function of quality and it is shown that his results are sensitive to the cost function of quality.

Date: 2005
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DOI: 10.1080/13504850500109717

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