Intertemporal monopolistic pricing of non-durables

This paper provides a tractable analytical framework to study intertemporal equilibria between non-competitive supply and dynamic demand for non-durable goods. The basic hypothesis is that consumers enjoy utility from particular services rather than from commodities. Consumption of the non-durable good follows a dynamic pattern, because it depends on the stock of durables and energy demand provides the prototypical example, e.g., mobility, thermal comfort, etc. are the output of a combination of durable and non-durable goods. Indeed, turmoils in energy markets are to a great deal due to short run inflexibility and this gives this theoretical paper a topical flavour. The outcomes differ substantially across the strategic setups while differences in expectations (myopic versus rational) matter only transiently but not in the long run.