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Trade-ins and introductory offers in a monopoly

van Ackere, Ann and Reyniers, Diane J. ORCID: 0000-0003-0677-2020 (1995) Trade-ins and introductory offers in a monopoly. RAND Journal of Economics, 26 (1). pp. 58-74. ISSN 0741-6261

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We model the commonly used marketing practices of offering discounts to either repeat buyers (trade-ins) or new buyers (introductory offers) of a quasi-durable good. We analyze these practices in terms of their potential for intertemporal and third-degree price discrimination. In our two-period model, the monopolist sets a first-period price that segments the second-period market optimally into holders and nonholders of the good. In the second period, different prices are quoted to the two market segments. We present three versions of the model with varying assumptions on consumers' rationality.

Item Type: Article
Official URL:
Additional Information: © 1995 RAND
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HB Economic Theory
Date Deposited: 02 Dec 2009 10:10
Last Modified: 08 Jun 2024 18:57

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