Assignment
QUESTION 1
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.
Preferences
|
Showtime
|
History Chanel
|
|
Customer 1
|
9
|
2
|
|
Customer 2
|
3
|
8
|
Should Time Warner bundle or sell separately?
QUESTION 2
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.
Preferences
|
Showtime
|
History Chanel
|
|
Customer 1
|
9
|
2
|
|
Customer 2
|
3
|
8
|
Should Time Warner bundle if everyone likes Showtime more than the History Channel, i.e., preferences are positively correlated?
QUESTION 3
Suppose Time Warner could sell Showtime for $9, and History channel for $8, while making Showtime-History bundle available for $13. Should it use mixed bundling. i.e., sells products both separately and as a bundle?