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Replacement cycles, income distribution and dynamic price discrimination

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  • Eduardo Correia de Souza
  • Jorge Chami Batista

Abstract

This article analyses how income distribution, Intellectual Property Rights and other regulatory policies such as minimum quality standards determine pricing strategies in a dynamic context where a monopolist periodically introduces new generations or upgrades of a durable good. Discrimination through quality and screening in this article takes place in a context where consumers buy several versions of the durable good during their lifetime, instead of a single version as in Inderst's (2008) or Koh's (2006). It also differs from Glass (2001) in that an equilibrium may emerge in which different consumer types replace their durable generations with different frequencies. Our modelling is motivated by stylized facts from the last Brazilian POF (household budget survey).

Suggested Citation

  • Eduardo Correia de Souza & Jorge Chami Batista, 2015. "Replacement cycles, income distribution and dynamic price discrimination," Applied Economics, Taylor & Francis Journals, vol. 47(31), pages 3292-3310, July.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:31:p:3292-3310
    DOI: 10.1080/00036846.2015.1013616
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    References listed on IDEAS

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    1. Amy Jocelyn Glass, 2001. "Price discrimination and quality improvement," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(2), pages 549-569, May.
    2. Inderst, Roman, 2008. "Durable goods with quality differentiation," Economics Letters, Elsevier, vol. 100(2), pages 173-177, August.
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