The Implicit Marginal Valuation of Cable Service in the United States

Noel D. Uri ()
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Noel D. Uri: Industry Analysis Division, Media Bureau, Federal Communications Commission, Postal: 445 12th Street SW, Washington, DC 20554 ,, http://www.fcc.gov/mb/industry_analysis/

Economia Internazionale / International Economics, 2005, vol. 58, issue 1, 79-115

Abstract: This paper estimates the implicit marginal value of channel offerings by cable systems in the United States. Hedonic analysis is a convenient framework in which to explore the relationship between the price of cable service and the channels offered by a cable system. Two separate hedonic equations are estimated - one for the price of analog cable service and one for the price of digital cable service. With regard to the price of analog cable service, the implicit marginal valuation is statistically significant at the five percent level and positive for just seven of 121 channel offerings and negative for eleven channels. For the price of digital cable service, the implicit marginal valuation is statistically significant and positive for just six of 88 channel offerings and negative for seven channels. The results suggest that a subscriber’s utility would be enhanced by a pricing structure different from the typical approach used by cable systems today of offering a bundled package consisting of several channels. One alternative is to allow consumers to subscribe to just those programming services for which they have a positive implicit marginal value (i.e., an a la carte pricing structure).

JEL-codes: L96 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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