IDEAS home Printed from https://ideas.repec.org/a/bpj/rneart/v12y2013i1p61-92n4.html
   My bibliography  Save this article

Vertical Integration in Multichannel Television Markets: A Study of Regional Sports Networks

Author

Listed:
  • Caves Kevin W.
  • Singer Hal J.

    (Navigant Economics)

  • Holt Chris C.

    (Senior Consultant, Navigant Economics)

Abstract

Regional sports networks (RSNs) have become among the most important and expensive programming carried by multi-channel video programming distributors (MVPDs), many of which have acquired RSNs in whole or in part. Under Nash bargaining theory, vertical integration creates incentives to charge downstream distribution rivals license fees in excess of what an independent RSN would negotiate. We show that the Nash framework also implies that this premium increases with the size of the MVPD’s local downstream footprint, and we estimate a reduced-form econometric model of RSN affiliate fees, which yields results consistent with theory. Finally, we discuss various policy implications.

Suggested Citation

  • Caves Kevin W. & Singer Hal J. & Holt Chris C., 2013. "Vertical Integration in Multichannel Television Markets: A Study of Regional Sports Networks," Review of Network Economics, De Gruyter, vol. 12(1), pages 61-92, March.
    • Handle: RePEc:bpj:rneart:v:12:y:2013:i:1:p:61-92:n:4
    DOI: 10.1515/rne-2012-0022
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/rne-2012-0022
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/rne-2012-0022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    2. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    3. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    4. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    5. 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 643-685, April.
    6. Wright Julian, 2004. "One-sided Logic in Two-sided Markets," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-21, March.
    7. Roson Roberto, 2005. "Two-Sided Markets: A Tentative Survey," Review of Network Economics, De Gruyter, vol. 4(2), pages 1-19, June.
    8. Austan Goolsbee & Amil Petrin, 2004. "The Consumer Gains from Direct Broadcast Satellites and the Competition with Cable TV," Econometrica, Econometric Society, vol. 72(2), pages 351-381, March.
    9. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June.
    10. Singer Hal J. & Sidak J. Gregory, 2007. "Vertical Foreclosure in Video Programming Markets: Implications for Cable Operators," Review of Network Economics, De Gruyter, vol. 6(3), pages 1-25, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gregory S. Crawford & Robin S. Lee & Michael D. Whinston & Ali Yurukoglu, 2018. "The Welfare Effects of Vertical Integration in Multichannel Television Markets," Econometrica, Econometric Society, vol. 86(3), pages 891-954, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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 643-685, April.
    2. Carlos Noton & Andrés Elberg, 2013. "Revealing Bargaining Power through Actual Wholesale Prices," Documentos de Trabajo 304, Centro de Economía Aplicada, Universidad de Chile.
    3. Allan Collard-Wexler & Gautam Gowrisankaran & Robin S. Lee, 2019. ""Nash-in-Nash" Bargaining: A Microfoundation for Applied Work," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 163-195.
    4. Gregory S. Crawford & Robin S. Lee & Michael D. Whinston & Ali Yurukoglu, 2018. "The Welfare Effects of Vertical Integration in Multichannel Television Markets," Econometrica, Econometric Society, vol. 86(3), pages 891-954, May.
    5. Bonnet, Céline & Bouamra-Mechemache, Zohra & Molina, Hugo, 2016. "The Welfare Effects of Brand Portfolio Strategies in the Soft Drink Industry: A Structural Bargaining Approach with Limited Data," 149th Seminar, October 27-28, 2016, Rennes, France 245168, European Association of Agricultural Economists.
    6. Matthew Backus & Thomas Blakee & Brad Larsen & Steven Tadelis, 2020. "Sequential Bargaining in the Field: Evidence from Millions of Online Bargaining Interactions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(3), pages 1319-1361.
    7. William P. Rogerson, 2021. "The Upstream Pass-Through Rate, Bargaining Power and the Magnitude of the Raising Rivals’ Costs (RRC) Effect," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 205-227, September.
    8. Gregory S. Crawford, 2015. "The economics of television and online video markets," ECON - Working Papers 197, Department of Economics - University of Zurich.
    9. Sutirtha Bagchi & Jagadeesh Sivadasan, 2017. "Barriers to Entry and Competitive Behavior: Evidence from Reforms of Cable Franchising Regulations," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 510-558, September.
    10. Jason Allen & Robert Clark & Jean-François Houde, 2019. "Search Frictions and Market Power in Negotiated-Price Markets," Journal of Political Economy, University of Chicago Press, vol. 127(4), pages 1550-1598.
    11. Gautam Gowrisankaran & Aviv Nevo & Robert Town, 2015. "Mergers When Prices Are Negotiated: Evidence from the Hospital Industry," American Economic Review, American Economic Association, vol. 105(1), pages 172-203, January.
    12. Pesendorfer, Martin & Schiraldi, Pasquale & Silva-Junior, Daniel, 2023. "Omitted budget constraint bias in discrete-choice demand models," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    13. Babur De los Santos & Daniel P. O'Brien & Matthijs R. Wildenbeest, 2018. "Agency Pricing and Bargaining: Evidence from the E-Book Market," Working Papers 18-14, NET Institute.
    14. Robin S. Lee, 2013. "Vertical Integration and Exclusivity in Platform and Two-Sided Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2960-3000, December.
    15. Chenyu Yang, 2017. "Could Vertical Integration Increase Innovation?," 2017 Meeting Papers 908, Society for Economic Dynamics.
    16. Rojas, Christian & Briceño, Arturo, 2019. "The effects of piracy on competition: Evidence from subscription TV," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 18-43.
    17. David P. Byrne, 2015. "Testing Models Of Differentiated Products Markets: Consolidation In The Cable Tv Industry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(3), pages 805-850, August.
    18. Howard Smith & Walter Beckert & Yuya Takahashi, 2020. "Competition in a spatially-differentiated product market with negotiated prices," Economics Series Working Papers 921, University of Oxford, Department of Economics.
    19. Philip G. Gayle & Ying Lin, 2022. "Market effects of new product introduction: Evidence from the brew‐at‐home coffee market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 525-557, August.
    20. Daiqiang Zhang, 2021. "Testing Passive Versus Symmetric Beliefs In Contracting With Externalities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(2), pages 723-767, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rneart:v:12:y:2013:i:1:p:61-92:n:4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.