J. Spicer et D. Bernhardt, DURABLE SERVICES MONOPOLISTS DO BETTER THAN DURABLE GOODS MONOPOLISTS, Canadian journal of economics, 30(4A), 1997, pp. 975-990
We consider a monopolist who can commit to a price path when selling a
good for which individual consumers demand at most one unit. Only if
the monopolist can also commit to destroying unpurchased stock and the
timing of stock release, can she earn more than a static monopolist.
This additional commitment power has empirical relevance for a wide ra
nge of goods that we term 'durable services.' The inability to store o
utput facilitates price discrimination by a durable services monopolis
t by permitting the credible threat of rationing. We detail sufficient
conditions for a durable services monopolist to produce more than a s
tatic or durable goods monopolist produces.