Firms launch products at high prices and later reduce them to engage in price discrimination
Economic literature supports the practice of launching products at high prices and reducing them over time as a mechanism for intertemporal price discrimination.
Both retrieved papers theoretically examine how firms use initial high prices followed by price reductions to screen consumers with different valuations, aligning directly with the claim.
Praveen Kumar. Intertemporal Price-Quality Discrimination and the Coase Conjecture. 2003. https://doi.org/10.2139/ssrn.379821
This study analyzes time-consistent intertemporal price discrimination by a monopolist, showing that prices decline over time to screen buyers with heterogeneous preferences.
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Paulo Nunes. Pricing strategy in the context of durable goods monopoly with discrete demand. 2015. https://doi.org/10.2298/eka1504061n
This article demonstrates that a durable goods monopolist uses intertemporal pricing strategies to effectively price discriminate among consumers with varying willingness to pay.
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