Analyzing the Welfare Impacts of Full-line Forcing Contracts

Justin Ho, Katherine Ho and Julie Mortimer
Authors registered in the RePEc Author Service: Kate Ho

No 16318, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Theoretical investigations have examined both anti-competitive and efficiency-inducing rationales for vertical bundling, making empirical evidence important to understanding its welfare implications. We use an extensive dataset on full-line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare. We identify and measure three primary effects of fullline forcing contracts: market coverage, leverage, and efficiency. We find that bundling increases market coverage and efficiency, but has little impact on one distributor gaining leverage over another. As a result, we estimate that full-line forcing contracts increased consumer and producer surplus in this application.

JEL-codes: L0 L1 L4 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-com
Note: IO
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Published as Justin Ho & Katherine Ho & Julie Holland Mortimer, 2012. "Analyzing the Welfare Impacts of Full-line Forcing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 468-498, 09.

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Journal Article: Analyzing the Welfare Impacts of Full-line Forcing Contracts (2012)
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