The welfare effects of aftermarket power with heterogeneous consumers and network effects

Nicolas Pasquier ()
Additional contact information
Nicolas Pasquier: UGA - Université Grenoble Alpes, GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

Post-Print from HAL

Abstract: Manufacturers of agricultural machinery increasingly bundle connected equipment with proprietary digital services, enhancing product value while strengthening control over maintenance and repair, a practice that has drawn regulatory scrutiny, notably from the Federal Trade Commission in its case against John Deere. We develop a model of durable goods sold to heterogeneous consumers in which high-valuation users generate profitable aftermarket demand, while low-valuation users are individually unprofitable. We show that such network effects can overturn standard welfare conclusions: stronger aftermarket power may increase consumer surplus while reducing firms' profits. These results highlight that the welfare impact of aftermarket power in durable goods markets depends critically on both consumer heterogeneity and network effects.

Keywords: Heterogeneous consumer; Aftermarket power; Network effects (search for similar items in EconPapers)
Date: 2026-08-26
References: Add references at CitEc
Citations:

Published in 53d European Association for Research in Industrial Economics (EARIE) Annual Conference, Aug 2026, Mannheim, Germany

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05733256

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().