Durable-Goods Monopoly with Discrete Demand

Durable-Goods Monopoly: Laboratory Market and Bargaining Experiments

“…This result holds for a market model with a continuum of buyers and for a bargaining model with a ᭧ RAND 2000. single buyer and a seller who is uninformed about the buyer's value. Bagnoli, Salant, and Swierzbinski (1989) show that when a seller has complete information about values for a finite number of prospective buyers, durability can provide an opportunity for the seller to price discriminate over time and extract larger profits than a ''static monopolist'' (e.g., a monopoly lessor) could obtain.…”

Durable‐Goods Monopoly with Privately Known Impatience: A Theoretical and Experimental Study

“…2 A similar example of intra-personal decision conßict arises in vertically related markets. An upstream monopoly selling to multiple downstream Þrms may signiÞcantly lose its market power because of the opportunism resulting from downstream competition (for experimental evidence, see Martin, Normann, and Snyder, 2001).…”

“…Coase conjectured that this can even lead to competitive and thus efficient market results. 2 Much of the literature on durable-goods monopoly has focused on the question under which conditions the Coase conjecture proves to hold and under which conditions it does not hold. For example, Stokey (1981) and Gul, Sonnenschein, and Wilson (1986) show that, with an inÞnite number of successive sales periods, there is an equilibrium in which the price is (arbitrarily) close to marginal cost.…”

“…This is the so-called Pacman Conjecture (Bagnoli et al, 1989). If the seller has a lower discount factor, he loses proÞts compared to a one-period monopolist.…”

Independent mistakes in large games

“…For example, in the durable good dynamic monopoly problem, a monopolist facing a finite number of buyers can extract all the surplus (Bagnoli, Salant and Swierzbinski (1989)), while in the continuum of buyers case (Fudenberg, Levine and Tirole (1985) and Gul, Sonnenschein and Wilson (1986)), the monopolist sells the good immediately at her reservation price. In the context of corporate takeovers, a potential raider cannot extract any surplus from a continuum of small shareholders (Grossman and Hart (1980)), while an appropriate scheme offered to a large but finite group of shareholders can extract all the efficiency gains due to the takeover (Holmstrom and Nalebuff (1992)).…”