6) Netflix is making two versions of its subscription plans (4K and FHD), which target consumers with high and low willingness to pay, as given in the table below. If there is zero marginal cost for the firm in both versions, what should be the incentive compatible second degree discriminated prices? Is this profit maximizing? Willingness to pay ($) 4K Consumer High WTP FHD 60 30 Low WTP 25 20

6) Netflix is making two versions of its subscription plans (4K and FHD), which target consumers with high and low willingness to pay, as given in the table below. If there is zero marginal cost for the firm in both versions, what should be the incentive compatible second degree discriminated prices? Is this profit maximizing? Willingness to pay ($) 4K Consumer High WTP FHD 60 30 Low WTP 25 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Netflix is making two versions of its subscription plans (4K and FHD), which target consumers with high and low willingness to pay, as given in the table below. If there is zero marginal cost for the firm in both versions, what should be the incentive compatible second degree discriminated prices? Is this profit maximizing?