Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 691: Exclusive Quality - Why Exclusive Distribution may Benefit the TV-viewers

Johan Stennek ()
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Johan Stennek: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Sports organizations, Hollywood studios and TV channels grant satellite and cable networks exclusive rights to televise their matches, movies and media contents. Exclusive distribution prevents viewers from watching attractive programs, and reduces the TV-distributors incentives to compete in prices. This paper demonstrates that exclusive distribution may also give providers of contents incentives to invest in higher quality and, as a result, force competitors to reduce their prices. Exclusive distribution may benefit all viewers, including those who are excluded

Keywords: Exclusive Contracts; Quality; Bargaining; Avertising; Investment

JEL-codes: C78; D43; K21; L42

44 pages, January 9, 2007

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