Durable Goods Price Cycles: Theory and Evidence from the Textbook Market(2011.10)

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CPDP- 54-E(PDF:446KB)	"Durable Goods Price Cycles: Theory and Evidence from the Textbook Market"(2011.10) Toshiki Iizuka(Faculty of Economics, The University of Tokyo Competition Policy Research Center, Japan Fair Trade Commission) Eric W. Bond(Economics Department, Vandercilt University) 　We study the pricing of a durable-goods monopolist who faces heterogeneous buyers.Our durable good has the features of a textbook: each period new consumers enter the market, and the introduction of a new edition kills off used goods. We show that,unlike the traditional Swan-type models where all consumers resell the good, the monopolist's optimal policy could be to increase the price over the life of an edition.Our empirical analysis supports this model: textbook prices increase as the share of used textbooks increases. Moreover, textbook prices tend to increase as the end of the current edition approaches. Keywords: kill-off used durable, durable goods, market for used and new goods, secondhand market, planned obsolescence JEL Classification Codes:D420, L120

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Contents，Author

"Durable Goods Price Cycles: Theory and Evidence from the Textbook Market"(2011.10)
Toshiki Iizuka(Faculty of Economics, The University of Tokyo Competition Policy Research Center, Japan Fair Trade Commission)
Eric W. Bond(Economics Department, Vandercilt University)
　We study the pricing of a durable-goods monopolist who faces heterogeneous buyers.Our durable good has the features of a textbook: each period new consumers enter the market, and the introduction of a new edition kills off used goods. We show that,unlike the traditional Swan-type models where all consumers resell the good, the monopolist's optimal policy could be to increase the price over the life of an edition.Our empirical analysis supports this model: textbook prices increase as the share of used textbooks increases. Moreover, textbook prices tend to increase as the end of the current edition approaches.
Keywords: kill-off used durable, durable goods, market for used and new goods, secondhand market, planned obsolescence
JEL Classification Codes:D420, L120