A Pre-purchase Product Trial of a Monopolist with Multiple Products

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.

Keywords:

• Monopoly
• product trial
• heterogeneous consumers

JEL Classification:

• L11

Notes

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²At ,

when

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