This presentation is part of: L50-1 Regulation and Industrial Policy

Console Price And Software Availability In The Home Video Game Industry

Richard T. Gretz, Ph.D., Economics, Bradley University, 1501 W Bradley Ave, Peoria, IL 61625

Using hedonic results from a unique data set covering the U.S. home video game industry (1976 – 2003) the interaction between software provision and console price is analyzed.  Increased software provision negatively effects console price.  This result is consistent with the theoretical literature on two-sided markets.  Findings suggest the two-sided pricing strategy employed by hardware firms is dynamic.  The percent of price decrease accredited to game provision decreases over time.