Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of DVDs

Julie Mortimer

No 11676, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: L0 O3 (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-com, nep-ino, nep-mic, nep-reg and nep-tid
Note: IO
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Citations: View citations in EconPapers (1)

Published as Mortimer, Julie Holland. "Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of DVDs." Quarterly Journal of Economics 122, 3 (August 2007): 1307-50.

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Related works:
Journal Article: Price Discrimination, Copyright Law, and Technological Innovation: Evidence from the Introduction of DVDs (2007)
Working Paper: Price Discrimination, Copyright Law, and Technological Innovation: Evidence From The Introduction of DVDs (2007)
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