This study addresses the effects of monopolistic firms’ location and guarantee time limit on pricing for goods requiring high maintenance expenditure, such as elevators, televisions and computers. A spatial maintenance model of two stages within a guaranteed time limit is outlined in this paper. Based on this model, location, maintenance commitment and pricing are all characterized under a monopoly situation. This paper outlines the optimal price and location for the monopolist. The effects of guarantee time limit on price are discussed.
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Pu‐yan Nie (2011) studied this question.
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