I thank Igal Hendel, David P. Myatt, Michael Waldman, and two anonymous referees for helpful comments.
Secondary markets with changing preferences
Article first published online: 12 SEP 2011
© 2011, RAND.
The RAND Journal of Economics
Volume 42, Issue 3, pages 555–574, Fall 2011
How to Cite
Johnson, J. P. (2011), Secondary markets with changing preferences. The RAND Journal of Economics, 42: 555–574. doi: 10.1111/j.1756-2171.2011.00139.x
- Issue published online: 12 SEP 2011
- Article first published online: 12 SEP 2011
If consumer valuations change over time, then secondary-market frictions may raise monopoly profits and cause durability to be distorted away from the cost-minimizing level. A monopolist who favors such frictions overinvests in durability, but planned obsolescence instead may be preferred when market frictions exist but a monopolist wishes they did not. Evidence from the book market is presented.