Pricing of complementary goods as an implicit financial arrangement

Jinhyuk Lee, Jaeok Park

Research output: Contribution to journalArticlepeer-review


This paper studies the common pricing practice of firms selling a durable good at a low price and a complementary consumable good at a high price. In our model, consumers discount future payments while firms receive a steady-state flow of revenues from selling the durable and consumable goods. As a result, there are potential gains from deferring consumers' payments to the future. We show that when firms commit to constant prices and consumer lock-in is possible, firms choose pricing consistent with the practice in monopoly and competition. Our result provides a new efficiency argument in the aftermarket literature.

Original languageEnglish
Pages (from-to)207-228
Number of pages22
JournalHitotsubashi Journal of Economics
Issue number2
Publication statusPublished - 2014 Dec 1
Externally publishedYes

Bibliographical note

Publisher Copyright:
© Hitotsubashi University.


  • Aftermarkets
  • Complementary goods
  • Consumer lock-in
  • Durable goods
  • Implicit financial arrangements

ASJC Scopus subject areas

  • General Business,Management and Accounting
  • Economics and Econometrics


Dive into the research topics of 'Pricing of complementary goods as an implicit financial arrangement'. Together they form a unique fingerprint.

Cite this