In this dissertation I focus on two considerations that influence the product strategy of a firm. The first is consumers’ choice and its influence on a firm’s product offering, and the second is the interaction between durable products and their contingent consumables. First, I study the assortment planning problem for a firm; I illustrate the complexity of solving this product selection problem, present simple solutions for some commonly used choice models, and develop heuristics for other practically motivated models. Second, I study the incentives of a durable goods monopolist when she can lock-in consumers through a contingent consumable. Adopting a lock-in strategy has two interesting effects on the incentives of a durable goods manufacturer. On one hand, by locking-in consumers to its consumable, a durable goods monopolist can curb its temptation to reduce durable prices over time, thereby mitigating the classic time inconsistency problem. On the other hand, lock-in will create a hold-up issue and adversely affect consumers’ expectations of future prices for the consumable. My research demonstrates the trade-off between time inconsistency and hold-up, and derives insights about the conditions under which a lock-in strategy can be effective. I further analyze the trade-off between time inconsistency and hold-up associated with lock-in in the presence of consumable stock-piling. My findings indicate in the presence of consumer stock-piling, lock-in has an effect similar to that of competition in the consumables market: they help to dampen the hold-up problem that arises from lock-in and at the same time increase the manufacturer’s incentive to reduce durable prices over time. / text
| Identifer | oai:union.ndltd.org:UTEXAS/oai:repositories.lib.utexas.edu:2152/7833 |
| Date | 21 June 2010 |
| Creators | Jonnalagedda, Sreelata |
| Source Sets | University of Texas |
| Language | English |
| Detected Language | English |
| Format | electronic |
| Rights | Copyright is held by the author. Presentation of this material on the Libraries' web site by University Libraries, The University of Texas at Austin was made possible under a limited license grant from the author who has retained all copyrights in the works. |
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