In 1997, Sony introduced the DVD player, replacing the VHS videotape and shepherding in a new era

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In 1997, Sony introduced the DVD player, replacing the VHS videotape and shepherding in a new era of high-definition movie viewing. Soon, there were over 100 different player models competing. DVD became the standard, preferred way to watch movies at home; VHS movies became increasingly difficult to rent and/or purchase. Then, in 2010, Netflix introduced streaming video that allowed users to watch movies on their television or mobile device. 

a. Explain why the consumer surplus gained by those purchasing DVD players was likely to be quite high between 1997 and 2010.

b. Describe how the introduction of streaming video likely altered the consumer surplus received by purchasers of DVD players after 2010.

c. Do you believe the consumer surplus received by movieviewes  increased or decreased after 2010? Explain.

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Microeconomics

ISBN: 9781319105563

3rd Edition

Authors: Austan Goolsbee, Steven Levitt, Chad Syverson

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