Business Modelling pp 55-75 | Cite as
Production Capacity for Durable Goods
Chapter
Abstract
A theory of manufacturing capacity choice for a durable good is provided. The remarkable conclusion is that efficient production may entail ten to fifty years before full market saturation is reached. The time to market saturation is increased as the good becomes less durable, and the size of the crash when saturation is reached falls as the durability decreases. The monopoly seller is efficient provided he doesn’t ever undercut himself, a feature of some equilibria of the “no gap” case, where demand intersects marginal costs.
Key words
Coase durable good market saturation production capacity market penetrationPreview
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References
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Copyright information
© Springer Science+Business Media New York 2002