DURABLE GOODS MONOPOLY AND MAINTENANCE

A durable goods monopolist may often be able to affect consumer maintenance or care decisions by raising or lowering the costs of repair or care. A monopolist can profit by encouraging maintenance when production costs are high or when used products are relatively good substitutes for new items. If enforcement of maintenance contracts is costly or verification of care to an outside party imperfect, and direct provision of maintenance by the monopolist ineffective, then, selling may be a more profitable marketing policy than renting.