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NON‐STATIONARY DEMAND IN A DURABLE GOODS MONOPOLY *
Author(s) -
USATEGUI JOSÉ M.
Publication year - 2007
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2007.01030.x
Subject(s) - durable good , economics , commit , monopoly , microeconomics , context (archaeology) , pareto principle , social welfare , operations management , computer science , paleontology , database , political science , law , biology
In a context where demand for the services of a durable good changes over time, and this change may be uncertain, we show in this paper that social welfare may be higher when the monopolist seller can commit to any future price level he wishes than when he cannot. Moreover, the equilibrium under a monopolist with commitment power may Pareto‐dominate the equilibrium under a monopolist without commitment ability. These results affect the desired regulation of a durable goods monopolist in this context.