Author: Gregory E. Goering Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Stylized durable goods monopoly models typically conclude that monopolists prefer to rent their output due to commitment problems associated with sales. However, we commonly observe monopolistic firms in durable goods industries simultaneously selling and renting output. To address this apparent discrepancy a simple two-period asymmetric information model is constructed where buyers are uncertain of the good's durability and the firm's manufacturing costs. This is a natural asymmetric information specification since the firm typically has more precise knowledge of product durability and production costs than buyers do. The analysis indicates that a monopolist may wish to concurrently sell and rent output when buyers do not have perfect knowledge. If, for example, consumers believe that product durability and manufacturing costs are higher than they truly are, the firm may wish to simultaneously sell and rent output. Thus buyers' expectations about firm costs and product durability are of critical importance in durable goods models, particularly in terms of explaining concurrent rentals and sales.
Author: Bucovetsky, Sam Publisher: London : Department of Economics, University of Western Ontario ISBN: 9780771404467 Category : Languages : en Pages : 52
Author: Timothy N. Cason Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper presents a model in which a durable goods monopolist sells a product to two buyers. Each buyer is privately informed about his own valuation. Thus all players are imperfectly informed about market demand. We study the monopolist's pricing behavior as players' uncertainty regarding demand vanishes in the limit. In the limit, players are perfectly informed about the downward-sloping demand. We show that in all games belonging to a fixed and open neighborhood of the limit game there exists a generically unique equilibrium outcome that exhibits Coasian dynamics and in which play lasts for at most two periods. A laboratory experiment shows that, consistent with our theory, outcomes in the Certain and Uncertain Demand treatments are the same. Median opening prices in both treatments are roughly at the level predicted and considerably below the monopoly price. Consistent with Coasian dynamics, these prices are lower for higher discount factors. Demand withholding, however, leads to more trading periods than predicted.
Author: Vera Tilson Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In durable goods markets, such as those for automobiles or computers, the coexistence of selling and leasing is common as is the existence of both corporate and individual consumers. Leases to the corporate consumers affect the price of used goods on the second-hand market which in turn affect the buying and leasing behavior of individual consumers. The setting of prices (or volumes) for sale and lease to individual and corporate consumers is a complicated problem for manufacturers. We consider a manufacturer who concurrently sells and leases a finitely durable good to both individual and corporate consumers. The interaction between the manufacturer and consumers is modeled as a dynamic sequential game, where each player seeks to maximize its own payoff over an infinite horizon. We study how the corporate channel and substitutability of new goods and used goods affect the manufacturer's pricing decisions, consumer behavior and social welfare in the retail market. Making a number of simplifying assumptions including two-period lifetime for the finitely durable goods, we show that all individual consumers follow Markov Perfect consumption strategies and based on their individual willingness to pay choose one of four two-period product bundles. They either (1) lease a new product every period, (2) repeatedly buying a new good and use it for two periods, (3) always buy used goods, and (4) do not participate in the market. We show that when used goods are poor substitutes for new goods, as the manufacturer increases her leasing volume in the corporate channel, she optimally raises her leasing price to individual consumers, but may not necessarily adjust the selling price of new goods. As the retail lease price rises, retail consumers that prefer leasing experience a loss in surplus. However, aggregate consumer surplus increases with increase in corporate leasing. On the other hand, when used goods are close substitutes for new goods, with increased corporate leasing, the manufacturer stops leasing to individual consumers and raises retail sales prices.
Author: Michael C. Jensen Publisher: McGraw-Hill Companies ISBN: Category : Business & Economics Languages : en Pages : 788
Book Description
This book of readings is an ideal supplement for courses in the theory of finance and corporate finance policy offered in MBA and Ph.D. programs, and for advanced courses in corporate finance offered in MBA or Ph.D. programs.
Author: Richard B. McKenzie Publisher: University of Michigan Press ISBN: 0472901141 Category : Business & Economics Languages : en Pages : 554
Book Description
In Defense of Monopoly offers an unconventional but empirically grounded argument in favor of market monopolies. Authors McKenzie and Lee claim that conventional, static models exaggerate the harm done by real-world monopolies, and they show why some degree of monopoly presence is necessary to maximize the improvement of human welfare over time. Inspired by Joseph Schumpeter's suggestion that market imperfections can drive an economy's long-term progress, In Defense of Monopoly defies conventional assumptions to show readers why an economic system's failure to efficiently allocate its resources is actually a necessary precondition for maximizing the system's long-term performance: the perfectly fluid, competitive economy idealized by most economists is decidedly inferior to one characterized by market entry and exit restrictions or costs. An economy is not a board game in which players compete for a limited number of properties, nor is it much like the kind of blackboard games that economists use to develop their monopoly models. As McKenzie and Lee demonstrate, the creation of goods and services in the real world requires not only competition but the prospect of gains beyond a normal competitive rate of return.
Author: Frank H. Knight Publisher: Cosimo, Inc. ISBN: 1602060053 Category : Business & Economics Languages : en Pages : 401
Book Description
A timeless classic of economic theory that remains fascinating and pertinent today, this is Frank Knight's famous explanation of why perfect competition cannot eliminate profits, the important differences between "risk" and "uncertainty," and the vital role of the entrepreneur in profitmaking. Based on Knight's PhD dissertation, this 1921 work, balancing theory with fact to come to stunning insights, is a distinct pleasure to read. FRANK H. KNIGHT (1885-1972) is considered by some the greatest American scholar of economics of the 20th century. An economics professor at the University of Chicago from 1927 until 1955, he was one of the founders of the Chicago school of economics, which influenced Milton Friedman and George Stigler.
Author: Gregory E. Goering
Author: Bucovetsky, Sam
Author: Timothy N. Cason
Author: Vera Tilson
Author: 
Author: Mark Bagnoli
Author: Michael C. Jensen
Author: Richard B. McKenzie
Author: Frank H. Knight
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