We thank the Mack Center at Wharton for financial support. Tom Holmes provided helpful comments on an earlier draft, and we thank referees and the Editor for additional input. We are also grateful to seminar participants at Kellogg, Ohio State, Michigan, the NBER 2008 Summer Institute IO group, QME, INFORMS in Washington, and ZEW in Mannheim for comments. All errors are our own.
Music for a Song: An Empirical Look at Uniform Pricing and Its Alternatives†
Article first published online: 19 DEC 2011
© 2011 The Authors. The Journal of Industrial Economics © 2011 Blackwell Publishing Ltd and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 59, Issue 4, pages 630–660, December 2011
How to Cite
Shiller, B. and Waldfogel, J. (2011), Music for a Song: An Empirical Look at Uniform Pricing and Its Alternatives. The Journal of Industrial Economics, 59: 630–660. doi: 10.1111/j.1467-6451.2011.00470.x
- Issue published online: 19 DEC 2011
- Article first published online: 19 DEC 2011
With digital music as its context, this paper quantifies how much money would be made using alternatives to uniform pricing. Using survey-based data on nearly 1,000 students' valuations of 100 popular songs in early 2008 and early 2009, we find that various alternatives can raise both producer and consumer surplus. Digital music revenue could be raised by between a sixth and a third relative to profit-maximizing uniform pricing. While person-specific uniform pricing can raise revenue by over 50 per cent, none of the non-discriminatory schemes raise revenue's share of surplus above 40 per cent of total surplus.