Microeconomic Analysis of Video Rental Store

A. Examination of the economics of the industry.

1. How the industry works.

a. Production/distribution structure.

2. Conditions required for profitability.

B. Assessment of demand for video tape rentals.

2. Tape rental price vs. purchase price.

3. Effects of cable, and network television.

4. Industry demand projections.

a. Factors affecting demand.

1. Types of tapes rented.

1. Number and type of video rental outlets.

a. Video rental stores.

b. Supermarket departments.

c. Other (including convenience stores).

2. Experience in local market.

(1) Factors affecting demand.

(2) Demand curve for the firm.

d. Pricing considerations.

(1) Nonapplicability of marginal concepts.

. . .
ntals. This disparity results from the relatively high sales prices ($19.95to$129.95) for prerecorded video cassette tapes, in comparison with rental prices ranging from $1.00to$3.00 per 24hour period. Although distributors cannot share in retail revenues directly, they attempt to maintain sole control over the market through wholesale pricing levels. If distributors were able to engage in differentiated price discrimination, it is possible that: (1) the total retail revenues from prerecorded video cassette tape sales and rentals could be increased; and (2) the distributors' share of industry revenues could be increased. Of course, if distributors could avoid restrictions 6of the First Sale Doctrine, the motion picture producers could also avoid the Doctrine's restrictions, which would mean that the producers would also be able to increase their share of the revenues derived through prerecorded video cassette tape distribution. The revision of the wholesale and retail pricing struc tures for prerecorded video cassette tapes of feature length motion pictures, thus, would likely benefit the industry, or parts of it, more than it would consumers. The most often discussed alternative pricing structure is one of price d
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Some common words found in the essay are:
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Approximate Word count = 3403
Approximate Pages = 14 (250 words per page)