Publication Type
Journal Article
Version
submittedVersion
Publication Date
2-2006
Abstract
This paper investigates the optimality of intertemporal price discrimination for a durable-good monopoly in a model where infinitely-lived households face an intertemporal budget constraint, and consume both durable goods and non-durable goods. We prove that the optimal price of the durable good is not constant, and may decrease or increase over time. Some households may choose to purchase the durable good at a later date, and pay lower or higher prices, since the gain in discounted utility of consuming more of the non-durable good more than compensates for the loss in utility from delaying the consumption of the durable good. [ABSTRACT FROM AUTHOR]
Keywords
Intertemporal price discrimination, Durable good monopoly, Optimal pricing strategy, Household demand
Discipline
Economic Theory | Finance
Research Areas
Economic Theory
Publication
Economic Theory
Volume
27
Issue
2
First Page
393
Last Page
410
ISSN
0938-2259
Identifier
10.1007/s00199-005-0599-4
Publisher
Springer Verlag
Citation
KOH, Winston T. H..
The Micro-Foundations of Intertemporal Price Discrimination. (2006). Economic Theory. 27, (2), 393-410.
Available at: https://ink.library.smu.edu.sg/soe_research/402
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1007/s00199-005-0599-4