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 once. Solutions to such games have been derived in another study (Guth and Ritzberger, 1992), both for finitely and infinitely many sales periods. We report on classroom experiments with two or three potential sales periods and different constellations of discount factors. Game theory predicts for those cases either intrapersonal price competition (Cease-conjecture) or price discrimination (Pacman-conjecture). An experimental variation is that one group of participants was introduced to the theory of durable goods monopolies, whereas another group was completely unfamiliar with this theory and game theory in general.