Analyzing the Welfare Impacts of Full-line Forcing Contracts
AbstractTheoretical investigations have examined both anti-competitive and efficiency-inducing rationales for vertical bundling, making empirical evidence important to understanding its welfare implications. We use an extensive dataset on full-line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare. We identify and measure three primary effects of fullline forcing contracts: market coverage, leverage, and efficiency. We find that bundling increases market coverage and efficiency, but has little impact on one distributor gaining leverage over another. As a result, we estimate that full-line forcing contracts increased consumer and producer surplus in this application.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 60 (2012)
Issue (Month): 3 (09)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
Other versions of this item:
- Justin Ho & Katherine Ho & Julie Holland Mortimer, 2010. "Analyzing the Welfare Impacts of Full-line Forcing Contracts," NBER Working Papers 16318, National Bureau of Economic Research, Inc.
- L0 - Industrial Organization - - General
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L4 - Industrial Organization - - Antitrust Issues and Policies
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- Katherine Ho & Justin Ho & Julie Holland Mortimer, 2012.
"The Use of Full-Line Forcing Contracts in the Video Rental Industry,"
American Economic Review,
American Economic Association, vol. 102(2), pages 686-719, April.
- Justin Ho & Katherine Ho & Julie Holland Mortimer, 2008. "The Use of Full-line Forcing Contracts in the Video Rental Industry," NBER Working Papers 14588, National Bureau of Economic Research, Inc.
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