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When Can a Durable Goods Seller Price Discriminate Intertemporally?

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  • Kolay Sreya

    (Paul Merage School of Business, University of California, Irvine, CA 92697, USA)

Abstract

A standard result in the literature on durable goods is that if buyers have foresight regarding a durable goods seller’s future pricing strategies, then the seller cannot perfectly price discriminate intertemporally. In a finite time horizon framework where buyers are large and finite in number, Bagnoli, Salant, and Swierzbinski (1989) constructed numerical examples in which the seller of the durable product is able to perfectly price discriminate across its consumers. This paper extends the examples in Bagnoli et al. to a general model of a durable-goods seller selling over a finite horizon to any finite number of individually significant consumers with different reservation prices for the product and provides a complete characterization of the equilibrium pricing strategies of the seller.

Suggested Citation

  • Kolay Sreya, 2015. "When Can a Durable Goods Seller Price Discriminate Intertemporally?," Review of Marketing Science, De Gruyter, vol. 13(1), pages 41-58, November.
    • Handle: RePEc:bpj:revmkt:v:13:y:2015:i:1:p:41-58:n:3
    DOI: 10.1515/roms-2014-0007
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    References listed on IDEAS

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    1. Qian Liu & Garrett J. van Ryzin, 2008. "Strategic Capacity Rationing to Induce Early Purchases," Management Science, INFORMS, vol. 54(6), pages 1115-1131, June.
    2. Kahn, Charles M, 1986. "The Durable Goods Monopolist and Consistency with Increasing Costs," Econometrica, Econometric Society, vol. 54(2), pages 275-294, March.
    3. von der Fehr, Nils-Henrik Morch & Kuhn, Kai-Uwe, 1995. "Coase versus Pacman: Who Eats Whom in the Durable-Goods Monopoly?," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 785-812, August.
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