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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title The welfare effects of vertical integration in multichannel television markets
Organization Unit
  • Gregory S. Crawford
  • Robin S Lee
  • Michael Whinston
  • Ali Yurukoglu
  • English
Institution Centre for Economic Policy Research
Series Name CEPR Discussion Papers
Number 11202
ISSN 0265-8003
Number of Pages 78
Date 2017
Abstract Text We investigate the welfare effects of vertical integration of regional sports networks (RSNs) with programming distributors in U.S. multichannel television markets. Vertical integration can enhance efficiency by reducing double marginalization and increasing carriage of channels, but can also harm welfare due to foreclosure and incentives to raise rivals' costs. We estimate a structural model of viewership, subscription, distributor pricing, and affiliate fee bargaining using a rich dataset on the U.S. cable and satellite television industry (2000-2010). We use these estimates to analyze the impact of simulated vertical mergers and divestitures of RSNs on competition and welfare, and examine the efficacy of regulatory policies introduced by the U.S. Federal Communications Commission to address competition concerns in this industry.
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Keywords Cable television, double marginalization, foreclosure, vertical integration