Optimal Strategies for Durable Goods Monopolists: Leasing, Selling or Hybrid?
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We show that a durable-goods monopolist increases profits by adopting both a leasing and selling policy (hybrid policy). We focus on consumer heterogeneity in that they have different attitudes when dealing with durable products; careful or careless. Careful consumers would purchase the product since they can get higher utility by using it more carefully and over a longer period of time, whereas careless users would rent it since they are comfortable abusing it. The monopolist offers two different choices to heterogeneous consumers and induces their self-selection, maximizing his profit from the discrimination effect. The monopolist can usurp the purchasing option from consumers by providing a pure-leasing strategy, but it offers a greater benefit to consumers and less profit. On the other hand, by adopting a hybrid strategy and presenting two choices, rental and purchase, to consumers, the monopolist obtains potential utility from consumers as a result.
Abstract
We show that a durable-goods monopolist increases profits by adopting both a leasing and selling policy (hybrid policy). We focus on consumer heterogeneity in that they have different attitudes when dealing with durable products; careful or careless. Careful consumers would purchase the product since they can get higher utility by using it more carefully and over a longer period of time, whereas careless users would rent it since they are comfortable abusing it. The monopolist offers two different choices to heterogeneous consumers and induces their self-selection, maximizing his profit from the discrimination effect. The monopolist can usurp the purchasing option from consumers by providing a pure-leasing strategy, but it offers a greater benefit to consumers and less profit. On the other hand, by adopting a hybrid strategy and presenting two choices, rental and purchase, to consumers, the monopolist obtains potential utility from consumers as a result.
참고문헌 (16)
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