Do active secondary markets aid or harm durable goods manufacturers? We build a dynamic equilibrium model of durable goods oligopoly, with consumers who incur lumpy costs when transacting in the secondary market, and calibrate it to U.S. automobile industry data. By varying transaction costs, we...

To investigate whether secondary markets aid or harm durable goods manufacturers, we build a dynamic model of durable goods oligopoly with transaction costs in the secondary market. Calibrating model parameters using data from the US automobile industry, we find the net effect of opening the...

This paper studies optimal nonlinear pricing for a monopolist when consumers' preferences exhibit temptation and self-control as in Gul and Pesendorfer (2001a). Consumers are subject to temptation inside the store but exercise self-control, and those foreseeing large self-control costs do not...

We examine the effects of durability on equilibrium producer behavior in the car market In this setting forward-looking producers take into account the effect that their current production decisions have on their current and future profits due to the existence of a secondary market First we...

A basic assumption of economics is that consumers choose what they want. However, many consumers find it difficult to stop overeating, overspending, smoking, procrastinating, etc, even though they want to. In reality, consumers have temptation and it is psychologically costly to exercise...

In this paper, we quantitatively investigate the effectiveness of a sales tax reduction in stimulating sales and profits of durable goods manufacturers. Our question is motivated by policy makers' recent interest in helping ailing automobile manufacturers and in replacing a fleet of highly...

This paper studies optimal nonlinear pricing for a monopolist when consumers' preferences exhibit temptation and self-control as in Gul and Pesendorfer (2001a). Consumers are subject to temptation inside the store but exercise self-control, and those foreseeing large self-control costs do not...

We examine the effects of durability on equilibrium producer behavior in the car market In this setting forward-looking producers take into account the effect that their current production decisions have on their current and future profits due to the existence of a secondary market First we...

We build a dynamic equilibrium model of a durable goods oligopoly with a competitive secondary market to evaluate the bias in estimating the structural parameters of demand and supply when durability is omitted. We simulate data from our dynamic model and use them to estimate the model's static...