Price Discrimination and Copyright Law: Evidence from the Introduction of DVDs

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper examines the welfare effects of intellectual property protection, accounting for firms' optimal responses to legal environments.

The recent growth of the internet and changes in household-level demand for entertainment

“…According to the Motion Picture Association (MPA), DVDs account for approximately 90% of total videos sold in 2004. 4 DVDs were often priced lower than VHS tapes (see Mortimer, 2004), which may have led to increases in DVD purchases. Another example includes technological progress in video game consoles and growing releases of new game titles.…”

The Consumer's Rent Vs. Buy Decision in the Rentailer

“…She finds that both distributor and retailer profits increase by about 10% from revenue sharing. Mortimer (2007) investigates optimal indirect price discrimination for the distributor and welfare effects given U.S. copyright law, which forbids direct price discrimination. She considers buying and renting as vertically differentiated products, and shows that distributors, in choosing whether to adopt "rental" or sell-through pricing, are in effect choosing whether to use inter-temporal price discrimination to segment high and low value customers.…”