Using a Soft Deadline to Counter Monopoly
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Masahiro Yoshida: Faculty of Political Science and Economics, Waseda University
No 2305, Working Papers from Waseda University, Faculty of Political Science and Economics
A monopolist often exploits a hard deadline to raise their commitment power. I explore whether a group of buyers can employ a soft deadline to counter the monopoly. Using a simple durable goods monopolist model under a deadline, I show that the buyers’ imperfect commitment to an earlier exit may elicit a compromise from the monopolist and generate the buyers’ premium. The soft deadline partially restores the self-competition dynamics of Coase conjecture, which is previously constrained by the hard deadline. Only one soft deadline breaks the conventional link between the time horizon (or durability of goods) and monopoly power.
Keywords: bargaining; durable goods monopoly; commitment; Coase conjecture; dead-line effect (search for similar items in EconPapers)
JEL-codes: C78 C91 (search for similar items in EconPapers)
Pages: 37 pages
New Economics Papers: this item is included in nep-com, nep-mic and nep-reg
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