Upgrades, Tradeins, and Buybacks
Volume: Volume 29, No. 2
Issue: Summer 1998
Pages: pp. 235-258
Authors: Drew Fudenberg and Jean Tirole
Title: Upgrades, Tradeins, and Buybacks
Abstract: We study monopoly pricing of overlapping generations of a durable good. We consider two sorts of goods: those with an active secondhand market and anonymous consumers, such as textbooks, and those with no secondhand market and consumers who can prove that they purchased the old good to qualify for a discount on the new one, such as software. In the first case we show that the monopolist may choose to either produce or repurchase the old good once the new one becomes available. In the latter case we determine when the monopolist chooses to offer upgrade discounts.
JEL Classification
Market Structure, Firm Strategy, and Market Performance: Monopoly;
Monopolization Strategies cartels; collusion
(L120)
Production, Pricing, and Market Structure;
Size and Size Distribution of Firms Concentration, Product Differentiation, Entry and Exit
(L110)
Market Structure and Pricing: Monopoly (D420)
Market Structure: Industrial Organization and Corporate Strategy
(6110)
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures
(0226)