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Subscription as a price descrimination device

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Author Info

  • Jean J. GABSZEWICZ

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE))

  • Nathalie SONNAC

    (Ecare, Université Libre de Burxelles and LEI/CREST, Paris)

Abstract

We propose a model representing a newspaper producer supplying a product which can be acquired by the readers either every day per one unit at a time, or by subscription. The population of potential buyers is differentiated according to the frequency at which they want to read the newspaper. First we identify the optimal pricing policy, namely, the optimal price for issues sold per unit at the newsstand, as well as the optimal subscription fee. Then we show that it is always more profitable to supply the market with both possibilites - free sale purchase and subscription - than to concentrate the sales on either of these alternatives.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 1999043.

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Length: 14
Date of creation: 01 Dec 1999
Date of revision:
Handle: RePEc:ctl:louvre:1999043

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