Price Discrimination & Intellectual Property

This chapter reviews the law and economics literature on intellectual property law and price discrimination. We introduce legal scholars to the wide range of techniques used by intellectual property owners to practice price discrimination; in many cases the link between commercial practice and price discrimination may not be apparent to non-economists. We introduce economists to the many facets of intellectual property law that influence the profitability and practice of price discrimination. The law in this area has complex effects on customer sorting and arbitrage. Intellectual property law offers fertile ground for analysis of policies that facilitate or discourage price discrimination. We conjecture that new technologies are expanding the range of techniques used for price discrimination while inducing new wrinkles in intellectual property law regimes. We anticipate growing commentary on copyright and trademark liability of e-commerce platforms and how that connects to arbitrage and price discrimination. Further, we expect to see increasing discussion of the connection between intellectual property, privacy, and antitrust laws and the incentives to build and use databases and algorithms in support of price discrimination

Pathways to Fragmentation:User Flows and Web Distribution Infrastructures

This study analyzes how web audiences flow across online digital features. We construct a directed network of user flows based on sequential user clickstreams for all popular websites (n=1761), using traffic data obtained from a panel of a million web users in the United States. We analyze these data to identify constellations of websites that are frequently browsed together in temporal sequences, both by similar user groups in different browsing sessions as well as by disparate users. Our analyses thus render visible previously hidden online collectives and generate insight into the varied roles that curatorial infrastructures may play in shaping audience fragmentation on the web

The Role of the Mangement Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firm's value system. We review extant literature in the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customer's interactions with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.CRM, Persoanlization, Marketing, e-commerce,

The effects of variety and bundling on choice and satisfaction: Applications to new telecommunication and media services

The purpose of this working paper is twofold; 1)to review consumer behavior literature on how assortment variety and bundling influence choice related variables, and 2)to apply this review on an analysis of telecommunication and new services. Literature related to the characteristics of assortment/bundle, perception of the assortment/bundle, perception of the choice situation, choice, perception of the choice, and experience with the chosen option is reviewed with focus on assortment and bundling. The review is based on an open literature search using keywords as “assortment size”, “assortment variety”, “bundling” and “unbundling” in databases as ISI and Ebsco. In addition, manual reviews of references used in the articles revealed from the databases have also been used to make sure we cover as many relevant articles as possible. The articles reviewed are briefly summarized in table 1 (assortment studies) and table 2 (bundling studies). Based on the literature reviewed, the results revealed are applied in a theoretical analysis of the effects of variety and bundling on choice- and post-choice related variables in new telecommunication and media services. Six services are discussed; traditional telephony and broadband services, mobile internet services and applications, services in heterogeneous access networks, multiplay services, TV-channel network services, and online video services. The analyses focus on potential effects of assortment variety and bundling on choice and post choice related variables for each of the six services. Because regulatory authorities typically use variety to stimulate efficient competition, some regulatory issues of relevance for each of the six services are also briefly discussed. The main results from the general consumer literature review on variety and bundling is summarized. A brief summary of what seems to be the most relevant issues related to variety, bundling, and regulatory actions for the six telecommunication and media services analyzed is also presented. The review of the literature and the analyses of the six services show a significant need for research on how variety and bundling influence choice and choice related variables. A discussion of potential routes for future research together with a preliminary draft of a research model closes the discussion of this working paper

Experiments on Lotteries for Shrouded and Bundled Goods: Investigating The Economics of Fukubukuro.

Fukubukuro (or lucky bag) is a familiar institution in Japan and many other countries used by retailers for disposing of unwanted stock during the New Year sales. Two features of the institution are important: First, in fukubukuro, stores bundle goods of related items into sealed bags rather than selling items separately. Secondly, while general information about the contents is provided, details of brands and specifications are concealed creating a lottery for the purchaser. Motivated by the fukubukuro example and the lack of evidence on risk attitudes in lotteries involving goods, we conduct a laboratory experiment and follow-up survey to investigate preferences for lotteries in which the outcomes are bundled or unbundled goods.\In general, we find that risk has a negative effect on subjects’ WTP for a product lottery. Nevertheless, a minority of subjects are risk-seeking and value the lottery more highly than the highest valued individual product. Conversely, we do not find much evidence of an uncertainty effect. Although subjects’ WTP responses to bundled product lotteries are less heterogeneous than their responses to single product lotteries, there is no significant advantage of selling bundled product lotteries over single product lotteries in relation to subjects’ risk preferences. We follow up the experiment with a hypothetical choice questionnaire in which we confront subjects with three options for a variety of goods: a certain product, its substitute, and a product lottery. We find that subjects who are riskseeking or have less product knowledge and familiarity are more likely to choose a product lottery. Furthermore, subjects are more likely to choose a product lottery when the choice task consists of complex products rather than simple products. We speculate that risk seeking and less-informed subjects may find a lottery between products to be a direct and simple way to solve their buying decision tasks.JEL Classification Codes: C91, D81http://www.grips.ac.jp/list/jp/facultyinfo/munro_alistair

Copyright and endogenous market structure: a glimpse from the journal-publishing market

This article explores the journal publishing industry in order to shed light on the overall economic consequences of copyright in markets. Since the rationale for copyright is among others to promise some market power to the holder of the successful copyrighted item, it also provides incentives to preserve and extend market power. A regular trait of copyright industries is high concentration and the creation of large catalogues of copyrights in the hands of incumbents. This outcome can be observed as the aggregation of rights and is one of the pivotal strategies for obtaining or extending market power, consistently with findings in other cases. Journal publishing is no different in this respect from other copyright industries, and in the last decade has experienced a similar trajectory, leading to a highly concentrated industry in which a handful of large firms increasingly control a substantial part of the market. It also provides a clear example of the effect of copyright dynamics on market structure, suggesting that a different attitude should be taken in lawmaking and law enforcement.copyright and market power, endogenous market structure, journal-publishing industry

Collaborative destination marketing at the local level:Benefits bundling and the changing role of the local tourism association

In a number of countries, local tourism associations (LTAs) are being expected to adopt the destination marketing role formerly attributed to regional-level destination marketing organisations (DMOs), which are presently either being actively dissolved or targeted for closure. Destination marketing can, however, be understood to be a public good (or, more precisely, a public service), which would generally prevent its provision by a subscription-based organisation such as an LTA. This is due to the presence of a strong ‘free-rider’ incentive for non-subscribers. The findings of this study show that LTAs in the UK have been able to overcome this ‘free rider’ effect by creating bundles of private and public benefits, the former being the benefits offered by the LTA in its traditional role as a trade representative body and the latter being the benefits associated with its newly acquired role as a local DMO. A qualitative–interpretive approach is adopted, using data gathered from LTA websites. While the conclusions are based on the UK policy context, it can be argued that the UK is a good analogue for other contexts. As such, the efforts of LTAs based in the UK to adapt to their new role are instructive for LTAs more generally