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The Welfare Effects of Bundling in Multichannel Television Markets

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  • Gregory S. Crawford
  • Ali Yurukoglu

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 a 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 a 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)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.2.643
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 2 (April)
Pages: 643-85

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:643-85

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  8. Gregory S. Crawford & Ali Yurukoglu, 2012. "The Welfare Effects of Bundling in Multichannel Television Markets," American Economic Review, American Economic Association, vol. 102(2), pages 643-85, April.
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  1. Does Cable TV Ripoff People Who Don’t Like Sports?
    by Alex Tabarrok in Marginal Revolution on 2013-01-18 12:12:02
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