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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society
Leasing versus Selling: Marketing Strategy Choice in Durable Goods Oligopolies
Vol.18, No.4, December 2007, 30–42
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Jong-Hee Hahn
(School of Economics, Yonsei University, Korea)
Sang-Hyun Kim
(School of Economics, Yonsei University, Korea)
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Abstract
This paper examines firms' strategic choice between leasing and selling in a market for horizontally differentiated durable goods. We show that firms' decisions on marketing strategy may lead to socially inefficient outcomes: firms choose leasing even though direct sales are socially more desirable. Moreover, a prisoners' dilemma situation may arise: firms choose leasing while they could be better off by selling together. We also discuss on the impact of the advance of information infrastructure on the marketing practice in software markets.
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Keywords
Leasing, Durable Goods, Horizontal Differentiation, Software |
JEL classification codes
L13, D43 |
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