Subscription as a price descrimination device
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.
|Date of creation:||01 Dec 1999|
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