A Pre-purchase Product Trial of a Monopolist with Multiple Products |
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Authors: | Sunku Hahn Song-Uk Kim |
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Institution: | 1. Department of Economics , Yonsei University , 262 Seongsanno, Seodaemun-gu, Seoul, 120-749, Republic of Korea hahn@yonsei.ac.kr;3. Department of Economics , Yonsei University , 262 Seongsanno, Seodaemun-gu, Seoul, 120-749, Republic of Korea |
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Abstract: | For the heterogeneous consumers who do not know their individual utilities from a new product, a pre-purchase product trial would be helpful. We found out that a monopoly firm with two similar products would have a strong incentive not to allow a pre-purchase product trial, even though it is socially optimal to allow it. Furthermore, it is more likely for a monopoly firm with a pre-purchase product trial policy to introduce a new product to the market when introducing a new product is socially optimal. |
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Keywords: | Monopoly product trial heterogeneous consumers |
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