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Old 03-04-2010, 11:14 AM   #138
Valdarez
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Re: EA Sports Plans To Digitize Madden 11 Consumer (IGN)

This really hearkens back to the NFL Exclusitivy deal and whether or not they have a monopoly control of the football market. To me, this smacks of a Monoply's ability to employ Price Discrimination.

A seller of a product in a competitive industry (i.e., one characterized by many competing sellers of a good or service) generally can only charge a single price (i.e., the price that its competitors are charging) to all of its customers. However, monopolists not only have the ability to charge a higher price than would competitive firms supplying the same product, but they also have the ability to charge significantly different prices to different customers for the same product.

Monopolists are invariably well aware both of this ability and of the fact that by taking advantage of it they can often gain much greater profits than they could by just charging a single price to all customers. That is, a monopolist can maximize its profits by charging a separate profit-maximizing price for each type or group of customers (those that buy new, purchase electronically new, or buy the game used) rather than by charging one profit maximizing price to all customers taken as a whole, because of the differences that generally exist among the different types or groups of customers with respect to their ability and willingness to pay. This behavior is termed price discrimination.

EA sports monopoly hold on the NFL football market enables their ability to engage successfully in price discrimination.
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Last edited by Valdarez; 03-04-2010 at 12:17 PM.
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