Dynamic Monopoly Pricing With Multiple Varieties: Trading Up
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arXiv
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| Main Authors: | , , |
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| Format: | Preprint |
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2021
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| _version_ | 1866909677726466048 |
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| author | Buehler, Stefan Eschenbaum, Nicolas Lenhard, Severin |
| author_facet | Buehler, Stefan Eschenbaum, Nicolas Lenhard, Severin |
| contents | This paper studies dynamic monopoly pricing for a broad class of settings that allow for multiple durable, multiple rental, or a mix of varieties. We show that the driving force behind pricing dynamics is the existence of trading-up opportunities. If there are no trading-up opportunities in the static monopoly outcome, then pricing dynamics do not emerge in equilibrium. With trading-up opportunities, pricing dynamics arise until these opportunities are exhausted or the game ends. We characterize the lower bound for the emerging prices and profit and study the conditions under which pricing dynamics end in finite time. |
| format | Preprint |
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arxiv_https___arxiv_org_abs_2108_07146 |
| institution | arXiv |
| publishDate | 2021 |
| record_format | arxiv |
| spellingShingle | Dynamic Monopoly Pricing With Multiple Varieties: Trading Up Buehler, Stefan Eschenbaum, Nicolas Lenhard, Severin General Economics Economics Theoretical Economics This paper studies dynamic monopoly pricing for a broad class of settings that allow for multiple durable, multiple rental, or a mix of varieties. We show that the driving force behind pricing dynamics is the existence of trading-up opportunities. If there are no trading-up opportunities in the static monopoly outcome, then pricing dynamics do not emerge in equilibrium. With trading-up opportunities, pricing dynamics arise until these opportunities are exhausted or the game ends. We characterize the lower bound for the emerging prices and profit and study the conditions under which pricing dynamics end in finite time. |
| title | Dynamic Monopoly Pricing With Multiple Varieties: Trading Up |
| topic | General Economics Economics Theoretical Economics |
| url | https://arxiv.org/abs/2108.07146 |