Assignment:
Question
Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle of both. Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.
The cost to Time Warner is $1 per customer for licensing fees.
Preference
Showtime History Chanel
Customer 1 9 2
Customer 2 3 8
Should Time Warner bundle or sell separately? Your answer needs to include the unbundled and bundled profits.