I investigate the behavior of a monopolist who supplies a video product in two different periods with the time-consistency constraint. In particular, I study the effects of the market interest rate on the solution. I also study the monopolist`s choice...
I investigate the behavior of a monopolist who supplies a video product in two different periods with the time-consistency constraint. In particular, I study the effects of the market interest rate on the solution. I also study the monopolist`s choice of the quality of media through which the video product is distributed. Findings of interest are as follows: The revenue reaches its maximum when the interest rate is either very low or very high. A monopolist who has both a high-quality and a low-quality medium available never employs the low-quality medium for the first period, but may employ it for the second period.