Hahn, Jong-Hee - Centre for Economic Research, School of Economics and … - 2002
A durable-goods monopolist may use quality degradation as a commitment not to lower price in the future. The …-discrimination aspect of quality degradation is in effect. However, it is more likely to reduce welfare by inducing low-valuation buyers to … buy the low-quality good early rather than to wait and buy the high-quality good later. So, quality degradation of durable …