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Price Discrimination, Copyright Law, and Technological Innovation: Evidence From The Introduction of DVDs

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  • Mortimer, Julie Holland

Abstract

U. S. copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets. In response, these firms can engage in indirect price discrimination. I derive theoretical predictions about the use of indirect price discrimination, and I analyze how optimal pricing strategies differ for different products. Using data on VHS and DVD movie distribution, I find that firms' pricing choices are consistent with the predictions of theory and that firms' use of indirect price discrimination benefits consumers (but harms ancillary retailers). Finally, I examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination.

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  • Mortimer, Julie Holland, 2007. "Price Discrimination, Copyright Law, and Technological Innovation: Evidence From The Introduction of DVDs," Scholarly Articles 3425914, Harvard University Department of Economics.
  • Handle: RePEc:hrv:faseco:3425914
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    Cited by:

    1. Chenghuan Sean Chu, 2010. "The effect of satellite entry on cable television prices and product quality," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 730-764.
    2. Xing Li & Megan MacGarvie & Petra Moser, 2014. "Dead Poets’ Property - How Does Copyright Influence Price," Discussion Papers 14-001, Stanford Institute for Economic Policy Research.
    3. Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012. "The Use of Full-Line Forcing Contracts in the Video Rental Industry," American Economic Review, American Economic Association, vol. 102(2), pages 686-719, April.
    4. Jordi McKenzie, 2010. "How do theatrical box office revenues affect DVD retail sales? Australian empirical evidence," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(3), pages 159-179, August.
    5. Ioannis Ioannou & Julie Holland Mortimer & Richard Mortimer, 2011. "The Effects Of Capacity On Sales Under Alternative Vertical Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 59(1), pages 117-154, March.
    6. Michael R. Galbreth & Bikram Ghosh & Mikhael Shor, 2012. "Social Sharing of Information Goods: Implications for Pricing and Profits," Marketing Science, INFORMS, vol. 31(4), pages 603-620, July.
    7. Joan Calzada & Tommaso M. Valletti, 2012. "Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions," Marketing Science, INFORMS, vol. 31(4), pages 649-667, July.
    8. Gilson Geraldino Silva Jr, 2011. "R&D, Marketstructure And Appropriability In The Brazilian Manufacturing," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 140, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Christian Handke, 2013. "Empirical evidence on copyright," Chapters,in: Handbook on the Digital Creative Economy, chapter 22, pages 249-261 Edward Elgar Publishing.
    10. Chenghuan Sean Chu, 2008. "The effect of satellite entry on product quality for cable television," Finance and Economics Discussion Series 2008-12, Board of Governors of the Federal Reserve System (U.S.).
    11. Ben Shiller, 2016. "Personalized Price Discrimination Using Big Data," Working Papers 108, Brandeis University, Department of Economics and International Businesss School.
    12. Hong Luo & Julie Holland Mortimer, 2016. "Copyright Infringement in the Market for Digital Images," American Economic Review, American Economic Association, vol. 106(5), pages 140-145, May.
    13. Ivan Png, 2006. "Copyright: A Plea for Empirical Research," Levine's Working Paper Archive 321307000000000484, David K. Levine.
    14. W. Walls, 2010. "Superstars and heavy tails in recorded entertainment: empirical analysis of the market for DVDs," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(4), pages 261-279, November.
    15. Gil, Ricard & Hartmann, Wesley R., 2008. "Why Does Popcorn Cost So Much at the Movies? An Empirical Analysis of Metering Price Discrimination," Research Papers 1983, Stanford University, Graduate School of Business.
    16. Peter Cohen & Robert Hahn & Jonathan Hall & Steven Levitt & Robert Metcalfe, 2016. "Using Big Data to Estimate Consumer Surplus: The Case of Uber," NBER Working Papers 22627, National Bureau of Economic Research, Inc.
    17. Anita Rao & Wesley Hartmann, 2015. "Quality vs. variety: Trading larger screens for more shows in the era of digital cinema," Quantitative Marketing and Economics (QME), Springer, vol. 13(2), pages 117-134, June.
    18. Ricard Gil & Wesley R. Hartmann, 2009. "Empirical Analysis of Metering Price Discrimination: Evidence from Concession Sales at Movie Theaters," Marketing Science, INFORMS, vol. 28(6), pages 1046-1062, 11-12.
    19. Gilson Geraldino Silva Jr, 2011. "Product Innovation, Market Structure Andappropriability In The Brazilian Manufacturing," Anais do XXXVIII Encontro Nacional de Economia [Proceedings of the 38th Brazilian Economics Meeting] 180, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    20. Michael Rushton, 2011. "Pricing the Arts," Chapters,in: A Handbook of Cultural Economics, Second Edition, chapter 49 Edward Elgar Publishing.
    21. Pinar Karaca-Mandic, 2011. "Role of complementarities in technology adoption: The case of DVD players," Quantitative Marketing and Economics (QME), Springer, vol. 9(2), pages 179-210, June.

    More about this item

    JEL classification:

    • L0 - Industrial Organization - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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