A dynamic incomplete information game is set up to study the introduction of a durable good when consumers can learn its quality from previous buyers. High sales today imply fewer potential buyers tomorrow, but each buyer will have better information about the good. Consumers are fully rational...

We analyze a simple dynamic durable good model. Two incumbent sellers and potential entrants choose their capacities at the start of the game. We solve for equilibrium capacity choices and the (necessarily mixed) pricing strategies. In equilibrium, the buyer splits the order with positive...