Netflix decides to start selling two subscriptions, an action and a drama subscription. They have four customers, each of whose valuation is indicated in the table below:

Assume the marginal cost of offering either subscription is zero.

• What are the optimal prices of each of the action and drama subscriptions if there is no bundling?
• If the action and drama subscriptions are sold only as a bundle, what is the optimal price of the bundle?
• If the action and drama subscriptions can optionally be purchased in a bundle, what are the optimal prices of each of the action subscription, drama subscription and bundle?

Transcribed Image Text:

Action Drama Ann 100 800 Bob 400 900 Charlie 600 800 Dom 700 200 Action Drama Ann 100 800 Bob 400 900 Charlie 600 800 Dom 700 200

Answer rating: 100% (QA)

AHere marginal costs are assumed to be zero If the firm opts for Sell High st... View the full answer