Introductory Pricing in a Doupoly

In many content markets, consumers often engage in multipurchase to seek variety and enhance their overall utility. Content distributors employ various acquisition strategies to expand their market share. This article investigates the optimal strategies for two distributors, which include vertical acquisition (i.e., acquiring new content), horizontal acquisition (i.e., implementing introductory pricing), and their impact on consumer multipurchase and surplus. The analysis reveals that the implementation of introductory pricing enables both distributors to generate higher profits; however, it comes at the cost of reduced consumer surplus compared to not using introductory pricing. Previous research shows that consumer multipurchase mitigates market competition. The authors demonstrate that both distributors tactically reduce their commitment prices to encourage a higher level of consumer multipurchase under certain conditions, thereby intensifying market competition. Furthermore, in cases where only one distributor acquires new content, the acquiring distributor tends to strengthen its competitive advantage, putting the rival at a disadvantage. The results indicate that both vertical and horizontal acquisitions are effective strategies when the initial differentiation among distributors is relatively high, and the content acquisition cost is low. Finally, the authors examine creators' pricing decisions and the market expansion induced by introductory pricing