Bundling Subscription TV Channels

Abstract I analyze a market, such as a subscription TV market, where multiple varieties of an excludable public good are traded in bundles Here bundling is not due to a producer's desire to extract consumers' surplus but due to economies of scope in distribution technology The paper studies the pricing and production decisions of a supplier as well as the impacts of certain regulations such as pure-bundling or pure-components pricing restrictions Findings of interest are as follows A profit-constrained welfare maximizer would use a pure-bundling price system when costs are low, and a mixed-bundling price system when costs are high A private monopolist produces too few varieties A pure-bundling restriction on a private monopolist may increase welfare and consumer surplus, but a pure-components restriction never increases them.