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Leasing versus selling : marketing strategy choice in durable goods oligopolies

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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.

Abstract

1. Introduction

2. The model

3. Price equilibrium

4. Marketing strategy decisions

5. Welfare analysis

6. Conclusion

Appendix

Acknowledgments

References

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