ON DURABLE GOODS MONOPOLIES - AN EXPERIMENTAL-STUDY OF INTRAPERSONAL PRICE-COMPETITION AND PRICE-DISCRIMINATION OVER TIME

In a durable monopoly market a single seller can offer his product for sale in subsequent periods. A customer, however, will buy at most onc e. Solutions to such games have been derived in another study (Guth an d Ritzberger, 1992), both for finitely and infinitely many sales perio ds. We report on classroom experiments with two or three potential sal es periods and different constellations of discount factors. Game theo ry predicts for those cases either intrapersonal price competition (Ce ase-conjecture) or price discrimination (Pacman-conjecture). An experi mental variation is that one group of participants was introduced to t he theory of durable goods monopolies, whereas another group was compl etely unfamiliar with this theory and game theory in general.