Price Discrimination via Proprietary Aftermarkets.

Price markups over marginal cost are often higher on "aftermarket" parts, service, and supplies for durable goods that they are on the goods themselves. One explanation for this phonomenons is that the aftermarket good is used as a "metering" device to price discriminate among consumer, a model developed by OI [1971] and Scmalensee [1981] in the context of a monopoly foremarket and monopoly aftermarket. This paper explores what happens in the metering model as competition increases in the aftermarket.