New Technology: The DVD
Introducing of DVD technology in the mid-1990s followed a similar path. Once a critical threshold of households owned DVD players, the rental market for movie on DVD emerged quickly. Exiting video rental firms found that they could easily add a few DVD racks to their stores, and rental price for DVDs soon came to approximate those for tapes (as might have been anticipated given the close substitutability between the two products). New outlets for DVD rentals, especially over the internet, also enhanced the supply response. Again, the absence of barriers to entry together with the ready availability of inputs of constant prices (shelf space and workers) resulted in a close approximation to the constant cost model.