The Welfare Effects of Bundling in Multichannel Television Markets

Gregory Crawford and Ali Yurukoglu

No 8370, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We measure how the bundling of television channels affects 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.

Keywords: A la carte; Bargaining; Bundling; Cable; Counterfactual; Econometrics; Multichannel; Nash product; Pay; Policy (search for similar items in EconPapers)
JEL-codes: C31 C72 L50 L82 (search for similar items in EconPapers)
Date: 2011-04
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Citations: View citations in EconPapers (40)

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Journal Article: The Welfare Effects of Bundling in Multichannel Television Markets (2012)
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