Welfare effects of competition in the UK Television Broadcasting Market

I study the consumer welfare effects of a regulation that ended the exclusivity of telecast rights of live English Premier League games and induced entry into the UK television broadcasting market. Historically rights were owned by a single broadcaster. The regulation divided the games into mutually exclusive bundles and stipulated that a single broadcaster cannot own rights to all of them. This resulted in a new channel entering the market and showing some games. I estimate a model of household viewing preferences, channel subscription demand, and pricing using proprietary viewing and subscription choice data. Simulations show a 6.4% (pound 10m per season) decline in consumer surplus driven by the higher prices consumers had to pay to view all the live games. This offset increased surplus from new content on the entrant channel. I propose an alternate regulation that breaks the exclusivity of games telecast on a channel and show that the estimated surplus could have been 29% higher.

Cost complementarities and package bidding in K-12 broadband

(with Gaurab Aryal, Charles Murry, Pallavi Pal)

arXiv

In this paper, we study the problem of designing broadband procurements for K-12 schools in New Jersey in the presence of cost complementaries and package bidding. Economies of scale in providing internet service can depress bids in individual school-level auctions leading to the exposure problem. Combining several schools to create packages and holding one all-or-nothing package auction can enable bidders to internalize these complementarities and lead to more efficient outcomes. We study these effects using broadband procurement data from New Jersey which implemented a centralized region level auction after aggregating the broadband demand of schools in that region.  Preliminary analysis shows that the price per Mbps paid by schools participating in the program fell by $8 per mbps while total broadband purchased went up by 345mbps. The package auction also incentivized ISPs to invest in fiber infrastructure resulting in a more efficient usage of the federal E-rate subsidy, which was designed to help schools and libraries in rural and economically poor regions obtain affordable broadband.

Work in Progress

Equilibrium effects of multi-homing on advertising prices

In this paper, I develop a model of the television advertising market where consumers can “multi-home” across channels, and equilibrium advertising spot prices are determined by not only the number of views but also its quality (percentage of non-overlapping viewers).  Advertisers are heterogeneous in their valuations of different consumer segments and they can choose to advertise on different channels. The model implies a drop in prices when advertisers can target the same customers on multiple channels and the drop is higher when consumers they value more, multi home at a higher rate. I test the implications of this model using the  2006 European Commission regulation that ended the exclusivity of telecast rights of live English Premier League games and induced entry into the UK television broadcasting market. The regulation provided a plausibly exogenous variation in the number of channels advertisers could target households and hence is a nice setup to study the effect of multi-homing on advertising prices.