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- Title
PRICE DISCRIMINATION, COPYRIGHT LAW, AND TECHNOLOGICAL INNOVATION: EVIDENCE FROM THE INTRODUCTION OF DVDS.
- Authors
Mortimer, Julie Holland
- Abstract
U. S. copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets. In response, these firms can engage in indirect price discrimination. I derive theoretical predictions about the use of indirect price discrimination, and I analyze how optimal pricing strategies differ for different products. Using data on VHS and DVD movie distribution, I find that firms' pricing choices are consistent with the predictions of theory and that firms' use of indirect price discrimination benefits consumers (but harms ancillary retailers). Finally, I examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination.
- Subjects
UNITED States; PRICE discrimination; COPYRIGHT; TECHNOLOGICAL innovations &; economics; DVD-Video discs; VHS (Video format); VIDEO rental services; ECONOMICS; MARKETING
- Publication
Quarterly Journal of Economics, 2007, Vol 122, Issue 3, p1307
- ISSN
0033-5533
- Publication type
Article
- DOI
10.1162/qjec.122.3.1307