Subscription Sharing: The Role of the Price-Sharing Rule
Abstract: This paper studies whether subscription sharing is profitable for a monopolist. I develop a model in which users may subscribe individually or in pairs, splitting the price according to an exogenous price-sharing rule. Sharing changes both the composition and the elasticity of demand: it generates subscription losses when high-valuation users share and crowd-in when low-valuation pairs subscribe jointly, while rent-pooling reduces price sensitivity. I show that the profitability of sharing depends critically on how users divide the subscription price. When users split the price equally, sharing always reduces profits, regardless of how prevalent it is. When users contribute according to willingness to pay, sharing increases profits provided that a sufficiently large share of users is willing to share. I also examine environments with correlated pair formation, external sharing platforms, and subscription menus with perfect enforcement. Correlation in willingness to pay, sharing platforms, and two-price menus amplify, but do not overturn, the central insight: the price-sharing rule is the key determinant of whether subscription sharing benefits the monopolist.

Assignment game and information acquisition