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Cyclic Pricing by a Durable Goods Monopolist

John Conlisk¹; Eitan Gerstner²; Joel Sobel¹

¹ University of California San Diego · ² North Carolina State University

In the model of this paper a monopoly seller of a durable good holds periodic sales as a means of price discrimination. A new cohort of consumers enters the market in each period, interested in purchasing the good either immediately or after a delay. Within each cohort, consumers vary in their tastes for the good. Under broad conditions, the seller will vary the price over time. In most periods, he will charge a price just low enough to sell immediately to consumers with a high willingness to pay. Periodically, however, he will drop the price far enough to sell to an accumulated group of consumers with a low willingness to pay.

DOI

10.2307/1885961

Volume

99 (3)

Pages

489

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