Departmental Bulletin Paper A Dynamic Monopoly with Experience Goods and Risk-Averse Consumers

Martín-Rodríguez, María

(E15-8) 2015-12 , 名古屋大学大学院経済学研究科附属国際経済政策研究センター
I analyze the dynamic problem of a monopolist facing different masses of risk- averse consumers in two periods. All qualities are equally costly and the true quality is uncertain for all the agents in the first period. I find that a semi-separating equilibrium is sustainable in the second period if the first-period market share is strictly positive due to social learning. Increasing patterns of prices may arise when low qualities are revealed, but this outcome is less likely with less risk-averse consumers. The welfare analysis suggests that the authority could only help when the consumers were not very risk averse.

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