The Comprehensive Big Deal options also involve price discrimination,but it is direct discrimination and it amounts to what is generally calledthird-degree price discrimination. Here, the price that a buyer is quoteddepends upon that buyer’s observable characteristics. In particular, itdepends upon the subscription base prior to the introduction of BigDeal bundling, which reveals a good deal about each library’s willingnessto pay for journals.Consider, for example, a college whose library budget allows it tosubscribe to only five Elsevier math titles for $10,000. If the individualsubscription prices of all of the Elsevier math journals totals to $100,000,the college will not need to pay $90,000 extra for access to the fullcollection once it has purchased either of the Big Deals. The subscriberwill be able to pay a “Subject Collection” fee of 15 percent of $90,000or $13,500 extra. Thus for $23,500, this school gets access to all thejournals electronically. Another school that had already subscribed to$90,000 in math journals would need to pay $90,000 +.15*($100,000-$90,000) = $91,500. The price for the comprehensive collection is muchhigher for the school that had already revealed itself to have a largedemand for math journals
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