A Game-Theory Analysis of Optimal Leasing and Selling Strategies of Durable Goods in Duopoly Markets

Wang Bo


In this paper, we analyze the strategic impact on the choice between leasing and selling in a duopoly market, a generalized model is developed based on the Cournot model, we not only consider the substitution relationship of two firms’ new products, but also take the competitiveness between new products and second-hand products into account, and we’ve discussed six cases respectively under different situations. The results show that if two firms simultaneously employ the same pure strategy, such as (leasing, leasing) or (selling, selling), pure selling strategy turns out to be better than pure leasing strategy. However, if one firm chooses pure selling strategy while the other chooses pure leasing strategy, leasing is the unique dominant behavior. In addition, if one firm’s choice is pure strategy, the other’s choice is a mix of leasing and selling strategy, pure strategy always dominates the mixed strategy except when the proportion of selling is sufficiently small.


Durable products; Leasing strategy; Selling strategy

Full Text:



Agrawal, V. V., Ferguson, M., Toktay, L. B., & Valerie, M. T. (2012). Is leasing greener than selling? Management Science, 58(3), 523-533.

Blanchard, O., & Melino, A. (1986). The cyclical behavior of prices and quantities: The case of the automobile market. Journal of Monetary Economics, 17(3), 379-407.

Coase, R. H. (1972). Durability and monopoly. Journal of Law and Economics, 15(1), 143-149.

Dasu, S., & Tong, C. (2010). Dynamic pricing when consumers are strategic: Analysis of posted and contingent pricing schemes. Eur. J. Oper. Res, 204(3), 662-671.

Elmaghraby, W., & Keskinocak, P. (2003). Dynamic pricing in the presence of inventory considerations: Research overview, current practices, and future directions. Management Science, 49(10), 1287-1309.

Federgruen, A., & Heching, A. (1999). Combined pricing and inventory control under uncertainty. Operations Research, 47(3), 454-475.

Feng, Y., & Gallego, G. (1995). Optimal starting times for end-of-season sales and optimal stopping times for promotional fares. Management Science, 41(8), 1371-1391.

Huang, S., Yang, Y., & Anderson, K. (2001). A theory of finitely durable goods monopoly with used-goods market and transaction cost. Management Science, 47(11), 1515-1532.

Jeffrey, I. M., & Garrett, J. V. R. (1999). Revenue management: Research overview and prospects. Transportation Science, 33(2), 233-257.

Kadet, A. (2004). The price is right. Smart Money, 12(3), 90-94.

Liu, Q., & van Ryzin, G. (2011). Strategic capacity rationing when customers learn. Manufacturing Service Operations Management, 13(1), 89-107.

Liu, Q., & Zhang, D. (2013). Dynamic pricing competition with the strategic customers under the vertical product differentiation. Management Science, 59(1), 84-


Marcus, B., & Anderson, C. (2008). Revenue management for low-cost providers. European Journal of Operational Research, 188(1), 258-272.

Preyas, S. D., & Devavrat, P. (1999). Competition in durable goods markets: The strategic consequences of leasing and selling. Marketing Science, 18(1), 42-58.

DOI: http://dx.doi.org/10.3968/%25x


  • There are currently no refbacks.

Copyright (c)

Share us to:   


  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

Submit an Articlehttp://cscanada.org/index.php/css/submission/wizard

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.
  • We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases: caooc@hotmail.com; css@cscanada.net; css@cscanada.org

 Articles published in Canadian Social Science are licensed under Creative Commons Attribution 4.0 (CC-BY).


Address1020 Bouvier Street, Suite 400, Quebec City, Quebec, G2K 0K9, Canada.

Website: Http://www.cscanada.net Http://www.cscanada.org 
E-mailcss@cscanada.net, css@cscanada.org

Copyright © Canadian Academy of Oriental and Occidental Culture