Monopolists incentivized to decrease product durability, impacting consumer wallets.
The article explores how a company selling durable goods can set prices to maximize profits. They found that as the durability of the goods increases, the optimal sale price first decreases, then increases. However, the rental price always decreases in the first period, and the price of used goods always increases in the second period. The total profits decrease as durability increases, leading companies to lower durability. Additionally, the coverage of new goods decreases in the first period with increasing durability.