Competitive planned obsolescence
نویسنده
چکیده
The incentives that durability offers to a monopolist to price discriminate over time and the related difficulties that secondhand markets create in these situations have been well recognized in the economics literature. The conventional problem for the monopolist is that, having sold a durable good, there is an incentive to reduce price later to bring into the market those consumers who would not pay the initial high price. However, consumers realize that the monopolist has such an incentive to reduce price once they have purchased, and those who value the good less highly wish to withhold their purchase until price falls. For this reason the monopolist is unable to extract as much money from the market as would be possible with precommitment. This notion was first discussed by Coase (1972) and has since been developed in several articles that consider the robustness of the basic observation (see, for example, Bagnoli, Salant, and Swierzbinski, 1989; Bulow, 1982; Gul, Sonnenschein, and Wilson, 1986; and Stokey, 1981). The essential problem is that the monopolist’s actions in the future provide competition for the company in the present market. If the monopolist is able to lease the good, distort technology, or implement buyback procedures, then more profit can be extracted from the market, since these strategies restrict the aftermarket (see, for example, Fudenberg and Tirole, 1998; Kahn, 1986; and Waldman, 1996, 1997). Failing this, the monopolist has an incentive to reduce durability or make the good obsolete after a period of time (see Bulow, 1986; Choi, 1994; Hendel and Lizzeri, 1999b; Rust, 1986; and Waldman, 1993). Since the presence of some monopoly power is essential to their arguments, these articles almost invariably analyze monopoly markets. However, obsolescence appears to be a feature that
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