Bundling, Product Choice, and Efficiency: Should Cable Television Networks be Offered A La Carte?
AbstractWe conduct a numerical analysis of bundling's impact on a monopolist's pricing and product choices and assess the implications for consumer welfare in cable television markets. Existing theory is ambiguous: for a given set of products, bundling likely transfers surplus from consumers to firms but also encourages products to be offered that might not be under a la carte pricing. Simulation of "Full A La Carte" for an economic environment calibrated to an average cable television system suggests that consumers would likely benefit from a la carte sales. If all networks continued to be offered, the average household's surplus is predicted to increase by $6.80 (65.6%) under a la carte sales (despite a total bundle price that almost doubles) and reduced network profits would have to be such that 41 of 50 offered cable networks have to exit the market to make her indifferent. Simulation of a "Theme Tier" scenario provides intermediate benefits. The incremental marginal costs to cable systems of a la carte sales and its impact in the advertising market and on competition are important factors in determining consumer benefits. (JEL L12, L82, L50).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Regulation2point0 in its series Working paper with number 126.
Date of creation: Jul 2006
Date of revision:
Contact details of provider:
Web page: http://regulation2point0.org/
Other versions of this item:
- Crawford, Gregory S. & Cullen, Joseph, 2007. "Bundling, product choice, and efficiency: Should cable television networks be offered a la carte?," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 379-404, October.
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2010.
"Price Coordination in Two-Sided Markets: Competition in the TV Industry,"
CESifo Working Paper Series
3004, CESifo Group Munich.
- Jarle Kind, Hans & Nilssen, Tore & Sørgard, Lars, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," Memorandum 18/2010, Oslo University, Department of Economics.
- Esther Hauk & Giovanni Immordino, 2011.
"Parents, Television and Cultural Change,"
CSEF Working Papers
280, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Esther Hauk & Giovanni Immordino, 2011. "Parents, Television and Cultural Change," Working Papers 544, Barcelona Graduate School of Economics.
- Esther Hauk & Giovanni Immordino, 2011. "Parents, Television and Cultural Change," UFAE and IAE Working Papers 868.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Li, Minqiang & Feng, Haiyang & Chen, Fuzan & Kou, Jisong, 2013. "Numerical investigation on mixed bundling and pricing of information products," International Journal of Production Economics, Elsevier, vol. 144(2), pages 560-571.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Archive Maintainer).
If references are entirely missing, you can add them using this form.