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| Author: | Fishman, A. Rob, R. |
| Title: | Product innovation by a durable-good monopoly |
| Journal: | RAND Journal of Economics
2000 : SUMMER, VOL. 31:2, p. 237-252 |
| Index terms: | INNOVATION CONSUMER DURABLES MONOPOLY |
| Language: | eng |
| Abstract: | The authors consider a durable-good monopolist that periodically introduces new models, each new model representing an improvement upon its predecessors. The authors show that if the monopolist is able neither to exercise planned obsolescence nor to give discounts to repeat customers, the rate of product introductions is too slow -- in comparison with the social optimum. On the other hand, if the monopolist is able to artificially shorten the durability of its products or to offer price discounts to repeat customers, it can raise its profit and, at the same time, implement the social optimum. |
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