Rationing in a Durable Goods Monopoly
Posted: 24 Feb 1999
Abstract
We offer a new explanation of equilibrium rationing. As is well known, a monopolist selling a durable good and not able to commit to a price sequence has an incentive to lower the price once the consumers with the greatest willingness to pay have bought, but this induces consumers to postpone purchases. We show that rationing reduces the incentive to lower future prices and may allow the monopolist to increase his discounted profit.
JEL Classification: D42, L12
Suggested Citation: Suggested Citation
Denicolo, Vincenzo and Garella, Paolo G., Rationing in a Durable Goods Monopoly. Available at SSRN: https://ssrn.com/abstract=138972
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