Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of Dvds

54 Pages Posted: 13 Dec 2005 Last revised: 12 May 2014

See all articles by Julie H. Mortimer

Julie H. Mortimer

Boston College; National Bureau of Economic Research (NBER); Harvard University - Department of Economics

Date Written: October 2005

Abstract

This paper examines the welfare effects of intellectual property protection, accounting for firms' optimal responses to legal environments and technological innovation. I examine firms' use of indirect price discrimination in response to U.S. copyright law, which effectively prevents direct price discrimination. Using data covering VHS and DVD movie distribution, I explain studios' optimal pricing strategies under U.S. copyright law, and determine optimal pricing strategies under E.U. copyright law, which allows for direct price discrimination. I analyze these optimal pricing strategies for both the existing VHS technology and the new digital DVD technology. I find that studios' use of indirect price discrimination under US copyright law benefits consumers and harms retailers. Optimal pricing under E.U. copyright law also tends to benefit studios and consumers. I also reanalyze these issues assuming continued DVD adoption.

Suggested Citation

Mortimer, Julie H., Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of Dvds (October 2005). NBER Working Paper No. w11676. Available at SSRN: https://ssrn.com/abstract=819837

Julie H. Mortimer (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3676 (Phone)

HOME PAGE: http://fmwww.bc.edu/ec/mortimer.php

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Department of Economics ( email )

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United States

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