The optimal suppression of a low-cost technology by a durable-good monopoly

Larry Karp and Jeffrey Perloff

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: If a durable-good monopoly can use either of two technologies whose properties are known to consumers, the monopoly uses only the technology with the lowest average cost at low levels of production. If consumers only know about technologies in use, the monopoly may use an inferior technology initially to increase its profits, keeping the new, efficient technology secret and switching later. Thus, in either case, an inferior technology may be used; however, switching between technologies occurs only if consumers are not fully informed about both technologies.

Keywords: coase conjecture; consumers; monopolies; profits; technology (search for similar items in EconPapers)
Date: 1994-10-01
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Related works:
Journal Article: The Optimal Suppression of a Low-Cost Technology by a Durable-Good Monopoly (1996)
Working Paper: The optimal suppression of a low-cost technology by a durable-good monopoly (1994)
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