Business, Management and Accounting
8 years ago

Monopoly pricing of durable goods impacts market power and recycling.

International Journal of Industrial Organization
Commitment and monopoly pricing in durable goods models
Valerie Y. Suslow

Paper Summary

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The article explores how a company that sells durable goods can affect prices by committing to a certain sales strategy. It compares two models that look at how durability, recycling, and market power interact. By extending the standard monopoly model to include depreciation, the study shows that the difference in pricing between new and recycled goods can be explained by a single parameter in the pricing equation.