In 1997, Sony introduced the DVD player, replacing the VHS videotape and shepherding in a new era
Question:
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.
Step by Step Answer:
Microeconomics
ISBN: 9781319105563
3rd Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson