It has been argued that two factors -- product durability and (potential) entry -- may force a monopolist to price at marginal cost. This article shows that when these two forces coexist, the tendency toward competition may be negated. First, we prove that durable goods oligopolists without...

In a vertically differentiated durable goods duopoly, prices tend to decline over time because the high-quality manufacturer's future product may compete more directly with the other firm's present product than with its own. This removes the standard reason not to cut prices (Stokey, 1979)....

This article considers a market served by a monopolist who sells a durable good that depreciates stochastically over time. We show that there exist three types of stationary equilibria: a Coase Conjecture equilibrium, a monopoly equilibrium, and a reputational equilibrium. When the depreciation...

In this article we investigate the nature of equilibrium in markets in which firms choose the scale of operation before they make pricing decisions. We analyze a duopoly model in which firms choose their capacities before engaging in Bertrand-like price competition. We demonstrate that the...

In this article we investigate the incentive to merge when firms that produce differentiated products engage in price competition. We demonstrate that mergers of any size are beneficial and are so increasingly: large mergers yield higher profits than smaller ones. This is in contrast to the...

We consider a two-stage game in which firms simultaneously select prices and capacities. Then, a random number of consumers attends the market and selects a firm to visit. Consumers know all prices and quantities but not the realization of aggregate demand. The probability of being served at any...