Web Appendices to Selling to Overcondent Consumers
نویسنده
چکیده
This appendix provides additional intuition based on option pricing for the result in Proposition 2. Consider the case of monopoly. At time one, the monopolist is selling a series of call options, or equivalently units bundled with put options, rather than units themselves. The marginal price charged for a unit q at time two is simply the strike price of the option sold on unit q at time one. The series of call options being sold are interrelated; a call option for unit q cant be exercised unless the call option for unit q 1 has already been exercised. However, it is useful to consider the market for each option independently. According to Proposition 2 (equation 8), when there is no pooling and the satiation constraint is not binding, the optimal marginal price for a unit q is:
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