Dynamic Monopoly Pricing With Multiple Varieties: Trading Up

Stefan Buehler, Nicolas Eschenbaum and Severin Lenhard

Papers from arXiv.org

Abstract: This paper studies dynamic monopoly pricing for a broad class of settings that allow for multiple durable, multiple rental, or a mix of varieties. We show that the driving force behind pricing dynamics is the existence of trading-up opportunities. If there are no trading-up opportunities in the static monopoly outcome, then pricing dynamics do not emerge in equilibrium. With trading-up opportunities, pricing dynamics arise until these opportunities are exhausted or the game ends. We characterize the lower bound for the emerging prices and profit and study the conditions under which pricing dynamics end in finite time.

Date: 2021-08, Revised 2025-07
New Economics Papers: this item is included in nep-com, nep-ind, nep-isf, nep-mic and nep-reg
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http://arxiv.org/pdf/2108.07146 Latest version (application/pdf)

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Working Paper: Dynamic Monopoly Pricing With Multiple Varieties: Trading Up (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2108.07146

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