Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of cases
- Preface
- Part I Getting started
- Part II Market power
- Part III Sources of market power
- Part IV Pricing strategies and market segmentation
- 8 Group pricing and personalized pricing
- 9 Menu pricing
- 10 Intertemporal price discrimination
- 11 Bundling
- Part V Product quality and information
- Part VI Theory of competition policy
- Part VII R&D and intellectual property
- Part VIII Networks, standards and systems
- Part IX Market intermediation
- Appendices
- Index
10 - Intertemporal price discrimination
from Part IV - Pricing strategies and market segmentation
- Frontmatter
- Contents
- List of figures
- List of tables
- List of cases
- Preface
- Part I Getting started
- Part II Market power
- Part III Sources of market power
- Part IV Pricing strategies and market segmentation
- 8 Group pricing and personalized pricing
- 9 Menu pricing
- 10 Intertemporal price discrimination
- 11 Bundling
- Part V Product quality and information
- Part VI Theory of competition policy
- Part VII R&D and intellectual property
- Part VIII Networks, standards and systems
- Part IX Market intermediation
- Appendices
- Index
Summary
In many markets, firms offer the same product in different periods and consumers buy only one item over the whole time horizon. This description of consumer behaviour fits particularly well for durable goods such as cars, washing machines (and other household appliances), computers and software (which does not wear out at all unless obsolescence is artificially imposed). It also fits for particular items that can be ordered in advance, such as a holiday package, a plane ticket and a concert ticket. While our insight derived in the first two sections of this chapter only applies to durable goods, we then obtain results that also apply to ticket sales.
In the case of durable goods, consumers derive the benefit from the purchase of the good over a number of periods. Also, consumers can decide on the timing of their purchase. An example is furniture consumers may want to replace. They may buy the piece immediately and replace the old piece; or they keep their old piece for some more time and thus postpone the purchase of the desired piece. Suppose a firm sells a product over a number of periods and that both firm and consumers have discount factor δ. If the firm sells the product in the first period only at a uniform price, it makes the standard monopoly profit (see Chapter 2).
- Type
- Chapter
- Information
- Industrial OrganizationMarkets and Strategies, pp. 239 - 258Publisher: Cambridge University PressPrint publication year: 2010