There has been a prominent and rapid movement in the last decade where more and more goods and services are being provided through a subscription service model in contrast to a more traditional single payment model. This different exchange involves a recurrent payment stream and a dynamic ownership structure that parses various rights associated with the good, whereas the one-time payment completely transfers property rights at the point of sale. This paper examines how consumer purchasing behaviors are ultimately altered by this complex parsing of the various bundle of rights associated with the good. I hypothesize that in the subscription service model, the firm retains certain property rights over the good which allows the firm to signal higher certainty about the product quality and compatibility in future periods. This, in turn, affects consumers’ evaluation of the good. I test this hypothesis with an ordinal logit regression over a sample of 110 videogames, finding statistically significant results supporting my hypothesis.
Choudhary, Raghu, "A Study of Contractual Structure in Subscription Service Models and Consumer Purchasing Behavior" (2019). Senior Independent Study Theses. Paper 8604.
Advertising and Promotion Management
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2019 Raghu Choudhary