On the Robustness of the Coase Conjecture

We revisit the classic dynamic durable goods monopoly and introduce a possibility of monopoly necessarily insisting on a price. We demonstrate the Coase conjecture is very robust with this perturbation. Though the effect is amplified by the normal monopolyÂ’s mimicking behavior, the monopoly canÂ’t get more than the competitive proÂ…t unless a price-insistent type is very likely. In particular, if the price-insistent type is rational (in the sense that she optimally chooses her own price), the full-blown Coase conjecture is strongly robust.

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