Choice of Product Variety for the Durable Goods Monopolist

Francisco Javier Casado Izaga and Ana Saracho
Authors registered in the RePEc Author Service: F. Javier Casado-Izaga

No 1134-8984, BILTOKI from Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística)

Abstract: This paper analyzes the strategic choice of variety by a monopolist seller of a durable good as a means to mitigate his commitment problem. The monopolist chooses his product variety with a goal of ensuring that a strong reduction in future prices will not be profitable because it allows the firm to attract few additional consumers. The main result that emerges from considering product variety as an endogenous variable is that, contrary to the case in which it is exogenously determined, social welfare is always higher when the monopolist cannot commit that when he can.

Keywords: durable goods monopolist; commitment; product variety (search for similar items in EconPapers)
Date: 1999-01
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Journal Article: Choice of Product Variety for the Durable-goods Monopolist (2002)
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Dpto. de Econometría y Estadística, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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