Assignment:
The Economics of Bundling
Today's economy is experiencing a merging of media firms. For example, companies like Verizon now provide phone, cell, TV and internet.
A common form of selling by these giant media firms involves putting them services in packages or “bundles” and offering them for a lower price than if the services were sold separately.
For example, Verizon may offer a deal for phone, TV, and internet services. Also, firms bundle TV channels in different packages. All of these practices have become very controversial.
First, watch this brief video on the economics of bundling:
https://www.youtube.com/watch?v=8mw5RLzWNnE (Links to an external site.)
Then read this analysis from the UCLA Law Review of the bundling controversies:
https://www.uclalawreview.org/?p=5642 (Links to an external site.)
Many consumers are moving away from buying bundles by “cutting the cord” through a variety of techniques. Watch this Wall Street Journal video on ways to cut the cord:
https://www.youtube.com/watch?v=d2YpIbQd0rM (Links to an external site.)
Questions:
Q.1 Explain the economics of bundling, both from a consumer and producer prospective (Use the UCLA article and concepts from the text in your answer.)
Q.2 Do you think that the government should limit the bundling of TV channels by cable companies?
Q.3 Is bundling a good idea for consumers? Explain your answer.
Yuor answer should be minimum of 1-2 pages per question. Be sure to use concepts from microeconomics throughout your answers. All parts of the questions must be answered.