When Can a Durable Goods Seller Price Discriminate Intertemporally?

A standard result in the literature on durable goods is that if buyers have foresight regarding a durable goods seller’s future pricing strategies, then the seller cannot perfectly price discriminate intertemporally. In a finite time horizon framework where buyers are large and finite in number, Bagnoli, Salant, and Swierzbinski (1989) constructed numerical examples in which the seller of the durable product is able to perfectly price discriminate across its consumers. This paper extends the examples in Bagnoli et al. to a general model of a durablegoods seller selling over a finite horizon to any finite number of individually significant consumers with different reservation prices for the product and provides a complete characterization of the equilibrium pricing strategies of the seller.