Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of Dvds
54 Pages Posted: 13 Dec 2005 Last revised: 29 May 2022
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
The Discriminatory Incentives to Bundle in the Cable Television Industry
-
Nearly Optimal Pricing for Multiproduct Firms
By Chenghuan Sean Chu, Phillip Leslie, ...
-
Price Discrimination and Copyright Law: Evidence from the Introduction of Dvds
-
The Welfare Effects of Bundling in Multichannel Television Markets
By Gregory S. Crawford and Ali Yurukoglu
-
Monopoly Quality Degradation and Regulation in Cable Television
By Gregory S. Crawford and Matthew Shum
-
The Use of Full-Line Forcing Contracts in the Video Rental Industry
-
The Use of Full-Line Forcing Contracts in the Video Rental Industry
-
Estimating the Effects of a la Carte Pricing: The Case of Cable Television