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Durable goods pr icing Tony is a seller of goods that last at most two periods. There are three potential cus tomers, H and L1
Durable goods pr icing Tony is a seller of goods that last at most two periods. There are three potential cus tomers, H and L1 and L2: each of whom wants at most one good. The respective utilities {in money units] they get are in the table below- Period 1 Period 2 H 1201?} 500 Ill-LE 51210 200' So if H 3 say, buys in the rst period, she gets a total utility of l?+5the price she pays: m. If she waits until the second period, she gets 500102, the price in the second period- The game is: Tony announces p1. H,L1,Lg, simultaneously and independently: decide whether to buy or not- Tony observes who has bought and who is left to buy and then chooses p2. Tony's payo" is the sum of [price Xquantities sold] over the two periods- The consumers get D it they don't buy anything; otherwise their payoff is calculated by subtracting price paid from total utility obtained. (a) "What is the subgame perfect Nash equilibrium pricing policy for Tony'fI (b) Tony suddenly nds out at the beginning of period one that he has only two items to sell- He is able to convince 11121 and L2 of this- "What is the subgame perfect equilibrium pricing strategy for Tony now'.' Is he better off or worse off than in [a]
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