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| Author: | Kumar, P. |
| Title: | Price and quality discrimination in durable goods monopoly with resale trading |
| Journal: | International Journal of Industrial Organization
2002 : NOV, VOL. 20:9, p. 1313-1339 |
| Index terms: | CONSUMER DURABLES Prices Quality Retailing |
| Language: | eng |
| Abstract: | The authors examine a durable goods monopolists optimal dynamic price and product Quality strategy when buyers are rational and can trade used durables among themselves. The monopolists optimal price and quality offers in the new good market exhibit complex dynamic patterns, and new good prices can fall as product quality improves even in the absence threats or learning economies. Initial quality distortions are followed by steady-state quality allocations that are always efficient for the high-valuation buyers, but sometimes also for the marginal consumer-types. Both the resale trading frequency and the price discount for secondhand goods are driven by the pace of strategic quality obsolence in the new good market. |
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