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Monopoly strategy with purchase dependent preferences and endogenous preference change

Stéphane Lemarié and Cecilia Vergari

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: We study the optimal monopoly pricing when consumers may buy one or two units of a good over two successive periods and their preferences evolve depending on past purchases and preference persistence. If the monopolist cannot discriminate between past and new buyers, he refrains from intertemporal price discrimination. Selling over two periods improves the monopoly profit as compared to the benchmark one-period equilibrium only for high preference persistence. Conversely, if the monopoly can discriminate between second period buyers, behavior-based price discrimination becomes profitable only for low preference persistence.

Keywords: Repeated purchases; monopoly dynamic pricing; vertical differentiation (search for similar items in EconPapers)
JEL-codes: L10 Q10 (search for similar items in EconPapers)
Date: 2021-03-01
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Note: ISSN 2039-1854
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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2021/271

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