Does Opportunism Explain Markups in Laser Printer Toner and Memory? - No and Yes. Evidence on Pricing in Laser Printer Aftermarkets

Markups are often much higher on aftermarket products than on corresponding durable goods. Many theoretical explanations of this phenomenon have been advanced, but little empirical work has tested them. Using data on laser printer toner and memory pricing, this paper sheds some empirical light on the source of high aftermarket markups. It focuses on one explanation: that durable goods producers opportunistically raise aftermarket prices as foremarket sales decline. It finds no support for this hypothesis in the toner market, but strong support in the memory market. It also examines price discrimination-related hypotheses, and finds mixed support