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The welfare effects of bundling in multichannel television markets

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Crawford, Gregory S. and Yurukoglu, Ali (2012) The welfare effects of bundling in multichannel television markets. American Economic Review, Volume 102 (Number 2). pp. 643-685. doi:10.1257/aer.102.2.643 ISSN 0002-8282.

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Official URL: http://dx.doi.org/10.1257/aer.102.2.643

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Abstract

We measure how the bundling of television channels affects short-run 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. (JEL D12, L11, L51, L82, M31)

Item Type: Journal Article
Divisions: Faculty of Social Sciences > Economics
Journal or Publication Title: American Economic Review
Publisher: American Economic Association
ISSN: 0002-8282
Official Date: 2012
Dates:
DateEvent
2012Published
Volume: Volume 102
Number: Number 2
Page Range: pp. 643-685
DOI: 10.1257/aer.102.2.643
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access

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