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A consumer's demand for a durable good is governed not only by his individual preferences but also by preferences of other market participants. This interdependence of preferences arises from the inevitable resale of durable goods. If most people prefer goods with certain features, original buyers conform and choose goods with these features even if they do not like them. Using a matching model, we show there is always conformity in equilibrium. The incentive to conform is strongest for long‐lived durables and for people who trade frequently. If average preferences are sufficiently strong, there is always too little conformity in equilibrium.

"The paper offers a new theoretical framework to examine the role of intermediaries between creators and potential users of new inventions. Using a model of universityindustry technology transfer, we demonstrate that technology transfer offices can provide an opportunity to economize on a critical component of efficient innovation investments: the expertise to locate new, external inventions and to overcome the problem of sorting 'profitable' from 'unprofitable' ones. The findings may help explain the surge in university patenting and licensing since the Bayh-Dole Act of 1980. Furthermore, the study identifies several limitations to the potential efficiency of intermediation in innovation." (author's abstract)