Asymmetric Information and Differentiated Durable Goods Monopoly: Intra-Period Versus Intertemporal Discrimination

• Type: Article in International Scientific Journal
• Date: 2022

Authors

Laussel, D (Author) Other; Long, NV (Author) Other; Joana Resende (Author) FEP

Journal

Title: DYNAMIC GAMES AND APPLICATIONS

Vol. 12 No. 2

Pages: 574-607

ISSN: 2153-0785

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 1 Citation

Other information

Authenticus ID: P-00V-NB1

DOI: 10.1007/s13235-021-00405-z

Abstract (EN): A durable good monopolist faces a continuum of heterogeneous customers who make purchase decisions by comparing present and expected price-quality offers. The monopolist designs a sequence of price-quality menus to segment the market. We consider the Markov perfect equilibrium (MPE) of a game where the monopolist is unable to commit to future price-quality menus. We obtain the novel results that: (a) under certain conditions, the monopolist covers the whole market in the first period (even when a static Mussa-Rosen monopolist would not cover the whole market), because this is a strategic means to convince customers that lower prices would not be offered in future periods and that (b) this can happen only under the stage-wise Stackelberg leadership assumption (whereby consumers base their expectations on the value of the state variable at the end of the period). Conditions under which MPE necessarily involves sequentially trading are also derived.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 34