Durable-Goods Monopoly: Laboratory Market and Bargaining Experiments
Year: 2000
Type: article
Abstract: Introduction n In a seminal article, Ronald Coase (1972) pointed out how product durability may limit a seller's monopoly power. A prospective durable-good consumer who expects decreasing price offers over time would be willing to wait to purchase as long as the expected gain from the price decrease exceeds the opportunity cost of waiting to purchase. This may induce a monopoly seller to set relatively low prices. This line of argument led Coase to propose what has come to be known as the Coase conjecture. If the product is perfectly durable and if consumers are sufficiently patient, then monopoly prices will converge to marginal cost almost instantaneously. The significance of product durability and monopoly power was recognized even before Coase's article. Major U.S. antitrust cases such as U.S. v. Aluminum Co. of America (1945) and U.S. v. United Shoe Machinery Corp. (1953) and criminal and civil antitr
Source: The RAND Journal of Economics
DOI: 10.2307/2601046
Author: Stanley S. Reynolds
Institution: University of Arizona
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funder: Alcoa
OpenAlex ID: W2170684156