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

Julie Mortimer

The Quarterly Journal of Economics, 2007, vol. 122, issue 3, 1307-1350

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.

Date: 2007
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Working Paper: 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 (2005)
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