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- Title
Dynamic monopoly pricing and herding.
- Authors
Bose, Subir; Orosel, Gerhard; Ottaviani, Marco; Vesterlund, Lise
- Abstract
We study dynamic pricing by a monopolist selling to buyers who learn from each other's purchases. The price posted in each period serves to extract rent from the current buyer, as well as to control the amount of information transmitted to future buyers. As information increases future rent extraction, the monopolist has an incentive to subsidize learning by charging a price that results in information revelation. Nonetheless, in the long run, the monopolist generally induces herding by either selling to all buyers or exiting the market.
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2006, Vol 37, Issue 4, p910
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/j.1756-2171.2006.tb00063.x