Time-Differentiated Monopolies

We consider sequential competition among sellers, who recognize future sellers as potential competitors and therefore do not necessarily set their monopoly prices, which are the prices they would set if consumers could only buy from the first arriving seller. We show, however, that whether an equilibrium price is indeed lower than the sellers’ monopoly prices depends on the form of consumers ’ impatience. With time discounting, this is so. But when impatience reflects decreasing valuations, the equilibrium price may (sometimes, must) coincide with the sellers ’ monopoly prices, which means that their market power is not diminished by competition with future sellers