This paper evaluates the welfare effects of bundling in multichannel television markets.We estimate an industry model of viewership, demand, pricing, bundling, and input market bargaining using data on purchases, prices, ratings, bundling decisions, and aggregate input costs. We conduct counterfactual simulations of à la carte policies that require cable and satellite television distributors to offer individual channels for sale to consumers. Equilibrium input costs are higher when channels are sold individually. Even so, mean consumer surplus increases by an estimated 8.5%, or $4.4 billion/year. Total industry profits decrease by an estimated 9.0%, with most losses to content providers. * We would like to thank
We measure the persuasive effects of slanted news and tastes for like-minded news, exploiting cable channel positions as exogenous shifters of cable news viewership. Channel positions do not correlate with demographics that predict viewership and voting, nor with local satellite viewership. We estimate that Fox News increases Republican vote shares by 0.3 points among viewers induced into watching 2.5 additional minutes per week by variation in position. We then estimate a model of voters who select into watching slanted news, and whose ideologies evolve as a result. We use the model to assess the growth over time of Fox News influence, to quantitatively assess media-driven polarization, and to simulate alternative ideological slanting of news channels. (JEL D72, L82)
We would like to thank the editor, five anonymous referees, and numerous individuals and seminar participants for helpful comments; and ESRC Grant RES-062-23-2586 (Crawford), the NYU Stern Center for Global Economy and Business (Lee), and the Toulouse Network for Information Technology and the NSF (Whinston) for support. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w21832.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Economics, and Zurich for comments and suggestions, and Carlos Sanchez-Martinez for excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
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