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Subscription as a price discrimination device

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  • GABSZEWICZ , Jean J.
  • SONNAC, Nathalie

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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Suggested Citation

  • GABSZEWICZ , Jean J. & SONNAC, Nathalie, 1999. "Subscription as a price discrimination device," LIDAM Reprints CORE 1450, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1450
    DOI: 10.1257/aer.103.1.145
    Note: In : Recherches Economiques de Louvain, 65(4), 421-433, 1999
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    Cited by:

    1. Charles Angelucci & Julia Cagé, 2019. "Newspapers in Times of Low Advertising Revenues," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 319-364, August.
    2. repec:hal:spmain:info:hdl:2441/4edekc99or8n2bu86nu4ua8adl is not listed on IDEAS
    3. Jairus J. Rossi & Timothy A. Woods & James E. Allen, 2017. "Impacts of a Community Supported Agriculture (CSA) Voucher Program on Food Lifestyle Behaviors: Evidence from an Employer-Sponsored Pilot Program," Sustainability, MDPI, vol. 9(9), pages 1-21, August.
    4. repec:hal:spmain:info:hdl:2441/26t617gatp86qree1dejcpchbr is not listed on IDEAS
    5. Marcelo Resende & Eduardo Ferioli, 2018. "Magazine Subscription and Intertemporal Discounting: Some Further Evidence," Economics Bulletin, AccessEcon, vol. 38(4), pages 2079-2093.

    More about this item

    JEL classification:

    • L - Industrial Organization
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L8 - Industrial Organization - - Industry Studies: Services

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