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The Welfare Effects of Bundling in Multichannel Television Markets

Author Info

Listed author(s):
  • 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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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 2 (April)
Pages: 643-685

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:643-85
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Find related papers by JEL classification:
  • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
  • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
  • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
  • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

References listed on IDEAS
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  1. A. Pakes & J. Porter & Kate Ho & Joy Ishii, 2015. "Moment Inequalities and Their Application," Econometrica, Econometric Society, vol. 83, pages 315-334, 01.
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  8. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, August.
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  11. Jean-Charles Rochet & Lars A. Stole, 2002. "Nonlinear Pricing with Random Participation," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 277-311.
  12. Jacques Cremer & Michael H. Riordan, 1987. "On Governing Multilateral Transactions with Bilateral Contracts," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 436-451, Autumn.
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  18. repec:rje:randje:v:37:y:2006:i:4:p:946-963 is not listed on IDEAS
  19. Adam D. Rennhoff & Konstantinos Serfes, 2009. "The Role of Upstream-Downstream Competition on Bundling Decisions: Should Regulators Force Firms to Unbundle?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(2), pages 547-588, 06.
  20. Katherine Ho, 2009. "Insurer-Provider Networks in the Medical Care Market," American Economic Review, American Economic Association, vol. 99(1), pages 393-430, March.
  21. 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.
  22. Donald W. K. Andrews & Gustavo Soares, 2010. "Inference for Parameters Defined by Moment Inequalities Using Generalized Moment Selection," Econometrica, Econometric Society, vol. 78(1), pages 119-157, 01.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  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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