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

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Author Info
Julie Holland Mortimer
Abstract

This paper examines the welfare effects of intellectual property protection, accounting for firms’ optimal responses to legal environments. I examine firms’ use of indirect price discrimination in response to U. S. copyright law preventing 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 find that studios’ use of indirect price discrimination benefits consumers and harms retailers. Optimal pricing under E. U. copyright law further benefits studios and consumers. I also reanalyze these issues assuming continued DVD adoption.

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File URL: http://www.economics.harvard.edu/pub/hier/2004/HIER2055.pdf
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Paper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 2055.

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Date of creation: 2004
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Handle: RePEc:fth:harver:2055

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  1. William R. Johnson, 2005. "Creative Pricing In Markets For Intellectual Property," Virginia Economics Online Papers 369, University of Virginia, Department of Economics. [Downloadable!]
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