Pacman conjecture

The Pacman conjecture holds that durable-goods monopolists have complete market power and so can exercise perfect price discrimination, thus extracting the total surplus.

In a December 1989 journal article[2] Mark Bagnoli, Stephen W. Salant, and Joseph E. Swierzbinski theorized that if each consumer could be relied upon to buy a good as soon as its price dipped below a certain point (with different consumers valuing goods differently, but all pursuing the same "get-it-while-you-can" strategy), then a monopolist could set prices very high initially and then "eat his way down the demand curve", extracting maximum profit in what Bagnoli et al. called "the Pacman strategy" after the voracious video game character.

A durable-goods monopolist sells goods which are in finite supply and which last forever, (not depreciating over time).

There is then an incentive for consumers to delay purchase of the good as they realize that its price will decrease over time.

The Pacman Conjecture requires that the monopolist to have perfect information about consumer reservation prices and an infinite time horizon.