Abstract
Theoretical investigations have examined both anti-competitive and efficiency-inducing rationales for vertical bundling, making empirical evidence important to understanding its welfare implications. We use an extensive dataset on full-line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare. We identify and measure three primary effects of full-line forcing contracts: market coverage, leverage and efficiency. We find that bundling increases market coverage and efficiency, but has little impact on one distributor's gaining leverage over another. As a result, we estimate that full-line forcing contracts increased consumer and producer surplus in this application.
Original language | English (US) |
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Pages (from-to) | 468-498 |
Number of pages | 31 |
Journal | Journal of Industrial Economics |
Volume | 60 |
Issue number | 3 |
DOIs | |
State | Published - Sep 2012 |
Externally published | Yes |
All Science Journal Classification (ASJC) codes
- Accounting
- General Business, Management and Accounting
- Economics and Econometrics