American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Welfare Effects of Bundling in Multichannel Television Markets
American Economic Review
vol. 102,
no. 2, April 2012
(pp. 643–85)
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 à 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 à 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)Citation
Crawford, Gregory S., and Ali Yurukoglu. 2012. "The Welfare Effects of Bundling in Multichannel Television Markets." American Economic Review, 102 (2): 643–85. DOI: 10.1257/aer.102.2.643Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L51 Economics of Regulation
- L82 Entertainment; Media
- M31 Marketing