In this paper, we study the time inconsistency problem in the durable
goods market with entry of new consumers in each period. The
monopolist only wants to sell the product to high valuation consumers at
the beginning. However, the accumulation of low valuation consumers
makes it irresistible to hold a sale, which takes away the monopolist’s
profits from high valuation consumers. He can strategically introduce a
damaged good and sell it to low valuation consumers to mitigate this
problem. In a two period model, he sells the damaged good in each
period. In an infinite horizon model, he introduces the damaged good
with some delay. The social welfare is lower with the introduction of the
damaged good than otherwise.
Total Reviews: 0
After completion purchase and payment you will get an email with download link of book. You can download this book within 24 hours. Be remember you can't download this book after 24 hours.