The Welfare Effects of Vertical Integration in Multichannel Television Markets
Author(s)
Crawford, Gregory S.
Lee, Robin S.
Yurukoglu, Ali
Whinston, Michael Dennis
Date Issued
May 2018
Journal
Econometrica
Publisher
The Econometric Society
Citation
Crawford, Gregory S., Robin S. Lee, Michael D. Whinston, and Ali Yurukoglu. “The Welfare Effects of Vertical Integration in Multichannel Television Markets.” Econometrica 86, no. 3 (2018): 891–954.
Version
Original manuscript
Abstract
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 data set 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.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.3982/ECTA14031
