The early 1970s witnessed three major advances in durable-goods theory--Swan (1970, 1971) and Sieper and Swan (1973) on optimal durability, Coase (1972) on time inconsistency, and Akerlof (1970) on adverse selection. This paper surveys durable goods theory starting with these three contributions, where much of the focus is on recent literature and on models that explain real-world phenomena. In addition to the ideas found in the contributions of Swan, Coase, and Akerlof, topics covered include why producers sometimes practice "planned obsolescence," the role of adverse selection in new-car leasing, and reasons for aftermarket monopolization.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003321164985

Durable Goods Theory for Real World Markets

Over 20 recent antitrust cases have turned on whether competition in complex durable-equipment markets prevents manufacturers from exercising market power over proprietary aftermarket products and services. We show that the price in the aftermarket will exceed marginal cost despite competition in the equipment market. Absent perfectly contingent long-term contracts, firms will balance the advantages of marginal-cost pricing to future generations of consumers against the payoff from monopoly pricing for current, locked-in equipment owners. The result holds for undifferentiated Bertrand competition, differentiated duopoly, and monopoly equipment markets. We also examine the effects of market growth and equipment durability.

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Exercising Market Power in Proprietary Aftermarkets

Drawing from the most recent work on economic regulation, this book introduces readers to the main principles and examines how economic regulation is applied in four key public utility industries - electricity, gas, water and telecommunications. Written for students and practitioners with little prior knowledge of economic regulation, this is an accessible, non-technical entry point to the subject area, exploring the fundamental questions: Why do we regulate? What are alternatives to regulation? Which institutions are involved in regulation? What have been the impacts of regulation? Readers will gain a clear understanding of the basic principles that apply to all regulated sectors, as well as the regulatory choices that reflect the specific economic and physical characteristics of different industries. Case studies demonstrate connections between regulatory theory and practice, and extensive references provide readers with resources for more in-depth study.

Modern Economic Regulation: An Introduction to Theory and Practice

After-sales and aftermarkets are significant revenue streams for industrial companies. After-sales services are activities during warranty periods that include field technical assistance, spare par...

After-sales services and aftermarket support: a systematic review, theory and future research directions

In this paper, we investigate dynamic price competition when firms strategically interact in two distinct but interrelated markets: a primary market and an aftermarket, where indirect network effects arise. We set up a differential game of two-dimensional price competition and we conclude that the absence of price competition in the aftermarket (competition in the market) fosters dynamic price competition in the primary market (competition for the market). We also investigate the impact of network sizes on firms' prices in the primary market concluding that, in equilibrium, larger firms have incentives to compete more fiercely for new "uncolonized" consumers.

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Does the absence of competition in the market foster competition for the market? A dynamic approach to aftermarkets

Refusals to Deal and Aftermarkets

Competition Policy and Regulatory Reform in Canada, 1986–1997

Expanding Responsibilities and Declining Resources: The Strategic Responses of the Competition Bureau, 1986–1996

Executive Summary 3 Introduction 6 The Central Problem 7 Focusing on a Few, Vital Objectives 8 Importance of Barriers to Entry 10 Does Foreign Ownership Really Matter? 12 Why the Ban on Foreign Ownership and Control? 14 The Case for Unilateral Action on Cabotage 16 Protecting Jobs is Both Inefficient and Unfair 17 A Possible Alternative to a Domestic Monopoly 19 Conclusions 19 References 21 About the Authors 23 Number 32 SOURCES PUBLIC POLICY

/pdf/avoiding-the-maple-syrup-solution-comments-on-the-2uimu9d0ul.pdf

W. T. Stanbury

Papers

Refusals to Deal and Aftermarkets

Competition Policy and Regulatory Reform in Canada, 1986–1997

Expanding Responsibilities and Declining Resources: The Strategic Responses of the Competition Bureau, 1986–1996

Avoiding the maple syrup solution: comments on the restructuring of Canada's airline industry.