South-Western College Publishing - Economics  
Make Sure You Don't Throw The DVD Out With The Camcorder
Subject Disposable DVD players
Topic Monopolistic Competition; Elasticity
Key Words

disposable camcorder, CVS, single-use, DVD

News Story

On the heels of the success of the disposable cameras, drugstore giant CVS Corporation is going to begin selling single-use, disposable digital camcorders.

Retailing for about $30, the camcorder will work on the same premise as disposable cameras. A camcorder with about 20 minutes of recording time can be used, and when finished can be taken to CVS. The person will then receive a DVD with the recorded images for about a $12.99 processing fee. Pure Digital will be the company producing the DVD mini-lab machines - similar to the one-hour photo processing machines already in use.

Such a single-use camcorder has some advantages. It weighs only 5 ounces, making it much lighter than more expensive camcorders. Further, it can be used more often outdoors, where it may be more dangerous to use an expensive camcorder.

There are drawbacks to this concept, though. Since many photo-capable cell phones are also equipped to record simple digital movies, there may not be much of a market for this type of product. It is assumed, though, that a product like this would be useful for people looking to record small pieces (such as Junior's baseball game or parts of a wedding reception) without the hassle of carrying around a heavy, expensive camcorder.

As a sign of things to come, Target Corporation will be testing a similar product in the coming year.


What can you say about the relative elasticity of demand for digital camcorders for those people who would use a single-use camera? Why?

2. What does the inclusion of the single-use camcorder do to the elasticity of demand for more expensive digital camcorders? Why?
3. What will happen to the profit level of a digital camcorder producer, such as Sony or JVC, upon the inclusion of this disposable camcorder into the market? Use a graph of monopolistic competition to explain your answer.
Source Sylvia Paga?n Westphal. "Tape and toss: users get DVD but camcorder is disposable." The Wall Street Journal, 7 June 2005. D3.

Return to the Monopolistic Competition | Elasticity Index

©1998-2005  South-Western.  All Rights Reserved   webmaster  |  DISCLAIMER