Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92879
Authors: 
Gunay, Hikmet
Year of Publication: 
2013
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 877
Abstract: 
When a durable good of uncertain quality is introduced to the market, some consumers strategically delay their buying to the next period with the hope of learning the unknown quality. We analyze the monopolist's pricing and waiting strategies when consumers have strategic delay incentives. We show when the monopolist offers introductory low prices in pooling equilibria. We also find two types of separating equilibria: one where high type signals its quality by choosing a different price than the low type in the first period, and another where the high-type monopolist announces the product in the first period and waits to sell only in the second period. Waiting creates a credible cost for signalling; hence, the monopolist uses it as a signalling device.
Subjects: 
Strategic delay
Introductory prices
Penetration pricing
Cream-skimming
Monopoly pricing
Coasian dynamics
JEL: 
C73
D42
D83
L12
Document Type: 
Working Paper

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