| Abstract: | Bundling can be a pricing mechanism by which monopolists capture economic surplus from consumers.We suggest that given the cost structure of media markets, channel bundling in the cable and satellite market could also emerge in a competitive environment. A la carte channel pricing on cable television may or may not increase consumer welfare and could decrease total welfare. Because bundling may create other problems, policymakers may consider allowing cable and satellite networks to sell packages of channel space to viewers at a given price, allowing viewers to choose which channels they want in their packages. We term this option quasi-bundling. |
