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Aftermarkets: The monopoly case

de Bijl,P.W.J.
Abstract
Consider a monopolist who sells a durable good, and repairs the good if it breaks down. Suppose that contracts that specify future repair prices cannot be written, so that there is an aftermarket" situation. When consumers are risk-averse, the monopolist chooses inefficiently high repair prices; if complete warranties were possible, he would fully insure consumers by guaranteeing to repair the good at a zero fee. To increase efficiency, the monopolist may attract a rival firm in the aftermarket, or lease the good. The latter option restores first-best efficiency
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Pagination: 23
Date
1995
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Unknown Publisher
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Tilburg University Research Output Collection
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Keywords
Monopoly, Leasing, After Sales Service, Repair, microeconomics, L12 - Monopoly ; Monopolization Strategies, D42 - Monopoly, L14 - Transactional Relationships ; Contracts and Reputation ; Networks
Citation
de Bijl, P W J 1995 'Aftermarkets : The monopoly case' CentER Discussion Paper, vol. 1995-102, Unknown Publisher.
URI
https://hdl.handle.net/20.500.14602/26274
License
info:eu-repo/semantics/restrictedAccess
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