The Welfare Effects of Bundling in Multichannel Television Markets
American Economic Review
vol. 102,
no. 2, April 2012
(pp. 643-85)
Abstract
We measure how the bundling of television channels affects short-run welfare. We estimate an industry model of viewership, demand, pricing, bundling, and input-market bargaining using data on ratings, purchases, prices, bundles, and input costs. We conduct simulations of à la carte policies that require distributors to offer individual channels for sale to consumers. We estimate that negotiated input costs rise by 103.0 percent under à la carte. These higher input costs offset consumer benefits from purchasing individual channels. Mean consumer and total surplus change by an estimated — 5.4 to 0.2 percent and — 1.7 to 6.0 percent, respectively. (JEL D12, L11, L51, L82, M31)Citation
Crawford, Gregory S., and Ali Yurukoglu. 2012. "The Welfare Effects of Bundling in Multichannel Television Markets." American Economic Review, 102 (2): 643-85. DOI: 10.1257/aer.102.2.643Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L51 Economics of Regulation
- L82 Entertainment; Media
- M31 Marketing