Description:
A monopolist often exploits a hard deadline to raise their commitment power. I explore whether a group of buyers can employ a soft deadline to counter the monopoly. Using a simple durable goods monopolist model under a deadline, I show that the buyers’ imperfect commitment to an earlier exit may elicit a compromise from the monopolist and generate the buyers’ premium. The soft deadline partially restores the price discrimination dynamics of Coase conjecture, which is previously canceled out by the hard deadline. The overall efficiency exhibits an inverted-U shaped curve with respect to the buyers’ commitment intensity, where the benefits from earlier agreements are traded off against breakdown costs