INTERTEMPORAL SELF-SELECTION WITH MULTIPLE BUYERS

We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer it ems of different quality at the same time to induce buyers to self-sel ect, as in Mussa-Rosen (1978), but is not artificially constrained to offer only one such menu. Instead the seller can offer without precomm itment a sequence of menus over time. In the two-buyer case where the seller has complete information about each buyer's marginal valuation for quality, the seller's profits exceed what can be obtained from a s ingle menu and sometimes approximate the profits of a perfectly discri minating monopolist. In companion papers (Bagnoli et al., 1990, 1992), we show that these conclusions continue to hold (1) in the infinite-h orizon case with any finite number of buyers and (2) in two-period exa mples where the seller has incomplete information about buyer preferen ces.