The Welfare Effects of Vertical Integration in Multichannel Television Markets

Gregory Crawford, Ali Yurukoglu, Michael D. Whinston and Robin Lee

No 11202, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the welfare effects of vertical integration of regional sports networks (RSNs) with programming distributors in U.S. multichannel television markets. Vertical integration can enhance efficiency by reducing double marginalization and increasing carriage of channels, but can also harm welfare due to foreclosure and incentives to raise rivals' costs. We estimate a structural model of viewership, subscription, distributor pricing, and affiliate fee bargaining using a rich dataset on the U.S. cable and satellite television industry (2000-2010). We use these estimates to analyze the impact of simulated vertical mergers and divestitures of RSNs on competition and welfare, and examine the e_cacy of regulatory policies introduced by the U.S. Federal Communications Commission to address competition concerns in this industry.

Keywords: Vertical integration; Foreclosure; Double marginalization; Raising rivals' costs; Cable television (search for similar items in EconPapers)
JEL-codes: L13 L42 L51 L82 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-com, nep-cul, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Welfare Effects of Vertical Integration in Multichannel Television Markets (2018)
Working Paper: The Welfare Effects of Vertical Integration in Multichannel Television Markets (2015)
Working Paper: The Welfare Effects of Vertical Integration in Multichannel Television Markets (2013)
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