Citation

Discussion Paper Details

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Title: The Welfare Effects of Bundling in Multichannel Television Markets

Author(s): Gregory S. Crawford and Ali Yurukoglu

Publication Date: April 2011

Keyword(s): a la carte, bargaining, bundling, cable, counterfactual, econometrics, multichannel, nash product, pay, policy, price discrimination, regulation, satellite, structural estimation and television

Programme Area(s): Industrial Organization

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 � 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 � 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.

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Bibliographic Reference

Crawford, G and Yurukoglu, A. 2011. 'The Welfare Effects of Bundling in Multichannel Television Markets'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8370