DYNAMIC CONSUMER DEMAND - A COMPARISON OF MONOPOLISTIC AND OLIGOPOLISTIC INTERTEMPORAL MARKET EQUILIBRIA

It is a recognized fact that monopolies need not be detrimental to consumers' interests (compared with competition), in particular, from evolutionary aspects. This paper provides an additional rationale for the potential superiority of monopolies (here, over Nash competing oligopolies) when consumers' demand is dynamic. For this purpose, a model of intertemporal consumer demand decisions is developed. This framework focuses on services, e.g. mobility, thermal comfort, that are produced with two substitutable inputs, durables and non-durables (energy). The derived demand for energy is integrated with intertemporal supply, oligopolistic and monopolistic. It will be shown that consumers may prefer in such a dynamic setting a monopoly compared with (oligopolistic) competition.