The optimal suppression of a low-cost technology by a durable-good monopoly
The optimal suppression of a low-cost technology by a durable-good monopoly
If a durable-good monopoly can use either of two technologies whose properties are known to consumers, the monopoly uses only the technology with the lowest average cost at low levels of production. If consumers know only about technologies in use, the monopoly may use an inferior technology initially to increase its profits, keeping the new, efficient technology secret and switching later. Thus, in either case, an inferior technology may be used; however, switching between technologies occurs only if consumers are not fully informed about both technologies.
346-364
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
Perloff, J.M.
658df26f-0e06-4edd-ae1c-788c6876d116
1996
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
Perloff, J.M.
658df26f-0e06-4edd-ae1c-788c6876d116
Karp, L. and Perloff, J.M.
(1996)
The optimal suppression of a low-cost technology by a durable-good monopoly.
The Rand Journal of Economics, 27 (2), .
Abstract
If a durable-good monopoly can use either of two technologies whose properties are known to consumers, the monopoly uses only the technology with the lowest average cost at low levels of production. If consumers know only about technologies in use, the monopoly may use an inferior technology initially to increase its profits, keeping the new, efficient technology secret and switching later. Thus, in either case, an inferior technology may be used; however, switching between technologies occurs only if consumers are not fully informed about both technologies.
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Published date: 1996
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Local EPrints ID: 32969
URI: http://eprints.soton.ac.uk/id/eprint/32969
ISSN: 0741-6261
PURE UUID: 663656ab-4ee1-43e6-a30a-a3fef0c04b1e
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Date deposited: 28 Jun 2007
Last modified: 08 Jan 2022 09:56
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Author:
L. Karp
Author:
J.M. Perloff
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