This article considers a durable goods monopolist's choice of price and durability in a setting where durability choice controls the speed with which quality deteriorates. The article derives three main results. First, the price at which old units trade on the secondhand market limits what the...

Durable-goods producers frequently choose to monopolize the maintenance markets for their own products. This paper shows that similar to leasing, one reason a firm may employ this practice is that it reduces or even eliminates problems due to time inconsistency. We first demonstrate this result...

By investing in R & D, a durable-goods monopolist can improve the quality of what it will sell in the future, and in this way reduce the future value of current and past units of output. This article shows that if the firm sells its output, then it faces a time inconsistency problem, i.e., the R...