Product strategies under durability, lock-in and assortment considerations

dc.contributor.advisorGilbert, Stephen M.en
dc.creatorJonnalagedda, Sreelataen
dc.description.abstractIn this dissertation I focus on two considerations that influence the product strategy of a firm. The first is consumers’ choice and its influence on a firm’s product offering, and the second is the interaction between durable products and their contingent consumables. First, I study the assortment planning problem for a firm; I illustrate the complexity of solving this product selection problem, present simple solutions for some commonly used choice models, and develop heuristics for other practically motivated models. Second, I study the incentives of a durable goods monopolist when she can lock-in consumers through a contingent consumable. Adopting a lock-in strategy has two interesting effects on the incentives of a durable goods manufacturer. On one hand, by locking-in consumers to its consumable, a durable goods monopolist can curb its temptation to reduce durable prices over time, thereby mitigating the classic time inconsistency problem. On the other hand, lock-in will create a hold-up issue and adversely affect consumers’ expectations of future prices for the consumable. My research demonstrates the trade-off between time inconsistency and hold-up, and derives insights about the conditions under which a lock-in strategy can be effective. I further analyze the trade-off between time inconsistency and hold-up associated with lock-in in the presence of consumable stock-piling. My findings indicate in the presence of consumer stock-piling, lock-in has an effect similar to that of competition in the consumables market: they help to dampen the hold-up problem that arises from lock-in and at the same time increase the manufacturer’s incentive to reduce durable prices over time.en
dc.description.departmentInformation, Risk, and Operations Management (IROM)en
dc.rightsCopyright is held by the author. Presentation of this material on the Libraries' web site by University Libraries, The University of Texas at Austin was made possible under a limited license grant from the author who has retained all copyrights in the works.en
dc.subjectProduct strategyen
dc.subjectDurable productsen
dc.subjectTime inconsistencyen
dc.subjectDurable pricesen
dc.subjectProduct selectionen
dc.titleProduct strategies under durability, lock-in and assortment considerationsen Managementen, Risk, and Operations Managementen University of Texas at Austinen of Philosophyen
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
1.15 MB
Adobe Portable Document Format
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
1.75 KB
Item-specific license agreed upon to submission