The Welfare Effects of Vertical Integration in Multichannel Television Markets

Robin Lee, Michael Whinston, Ali Yurukoglu and Gregory Crawford
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Gregory Crawford: University of Warwick

No 81, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate the welfare effects of vertical integration in U.S. multichannel television markets. Vertical integration in this market can enhance efficiency by aligning investment incentives and/or reducing double marginalization, but can also increase market power by encouraging raising rivals costs. We measure these competing effects in the carriage, channel placement, and pricing decisions of regional sports networks (RSN's) by affiliated and unaffiliated cable and satellite television distributors. We carry out descriptive analyses that compare integrated and non-integrated RSN's and distributors' prices and carriage, investment levels, and viewership ratings. We then estimate a model of viewership, subscription, distributor pricing, bargaining, and investment in RSN quality. We use the estimated model to analyze the welfare effects of simulated vertical mergers and de-mergers and the closing of the so-called "terrestrial loophole" by the U.S. Federal Communications Commission

Date: 2013
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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 (2016)
Working Paper: The Welfare Effects of Vertical Integration in Multichannel Television Markets (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:81

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