Shadow subscription for online video rental stores and affine systems
DOI:
https://doi.org/10.17811/ebl.15.3.2026.192-201Keywords:
L5, L12, L82, L86Abstract
This article computes the optimal price-by-quantity curves for a monopolistic platform that sells goods (vg. films) with zero marginal cost to identified consumers. The optimal curves are named “shadow subscription,'' being a pricing system intermediate between transaction fees and subscriptions. Substantial improvements in revenue and total value (revenue plus consumer surplus) are observed between the optimal price-by-quantity curves and the conventional alternatives (transaction fees, subscription and a combination of both) for some parametric choices.
We conjecture that a stylized shadow subscription could be a pricing model of interest to market challengers, fostering competition within the Internet economy. Further research avenues on shadow subscription are suggested.
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