Operations and Supply Chain Management Commons^™

Installed Base Management Versus Selling In Monopolistic And Competitive Environments, Shantanu Bhattacharya, Andreas Robotis, Wassenhove Luk N. V. Van

Research Collection Lee Kong Chian School Of Business

This paper compares the policy of selling a product to that of installed base management, in which the manufacturer leases the product to consumers, and bundles repair and maintenance services along with the product. We compare the two policies in a monopolistic setting when a firm uses either one of the policies, and when both policies are used by a single firm. We then compare the policies under competition first when two firms use identical products, and when two firms use vertically differentiated products. Our findings indicate that the selling option dominates the installed base option in a monopolistic environment, …