Consider a durable goods producer that has the option of monopolizing an aftermarket such as repair for its own product. An important question is whether such monopolization reduces welfare? We show that the anwer to this question is frequently no. In particular, we explore three models that illustrate various ways in which aftermarket monopolization can reduce inefficiencies and thus increase social welfare and frequently also consumer welfare. Our paper shows that efficiency enhancing aftermarket monopolization may be much more common than previous literature suggests.

Speaker

Michael Waldman

Cornell University

Date

05.03.2009

Event Location

ZEW, L 7,1 D-68161 Mannheim

Contact

Research Associate