Optimal priority pricing by a durable goods monopolist

A durable goods monopolist proposes selling mechanisms in two periods, being unable to commit in the first period on the mechanism to propose in the second. Trade is anonymous and resale is not possible. Although buyers have a continuum of possible valuations, the optimal first-period mechanism is a menu with at most two possibilities: a high price guaranteeing delivery and a low price subject to rationing. This characterization is robust to the arrival of additional buyers in the second period. The optimal mechanism is fully characterized for linear demand, with priority pricing being optimal if agents are sufficiently patient. (C) 2021 Elsevier Inc. All rights reserved.