1. Individual Problems 16-1 Two equal-sized streaming services have an overlap circulation of 10% (10% of the subscribers subscribe to both). Advertisers are willing to pay $15 to advertise in one service but only $29 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by telling each service that they're going to reach agreement with the other service, whereby they pay the other streamer $14 to advertise. According to the nonstrategic view of bargaining, each streaming service would earn $ agreement with the advertisers. The total gain for the two streaming services from reaching an agreement is $ of the $14 in value added by reaching an Suppose the two streaming services merge. As such, the advertisers can no longer bargain by telling each streaming service that they're going to reach agreement with the other service. Thus, the total gains for the two parties (the advertisers and the merged streaming services) from reaching an agreement with the advertisers are $14. According to the nonstrategic view of bargaining, each merged streaming service will earn $ This gain to the merged streaming service is in an agreement with the advertisers. than the total gains to the individual streaming services pre-merger.
1. Individual Problems 16-1 Two equal-sized streaming services have an overlap circulation of 10% (10% of the subscribers subscribe to both). Advertisers are willing to pay $15 to advertise in one service but only $29 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the advertisers bargain by telling each service that they're going to reach agreement with the other service, whereby they pay the other streamer $14 to advertise. According to the nonstrategic view of bargaining, each streaming service would earn $ agreement with the advertisers. The total gain for the two streaming services from reaching an agreement is $ of the $14 in value added by reaching an Suppose the two streaming services merge. As such, the advertisers can no longer bargain by telling each streaming service that they're going to reach agreement with the other service. Thus, the total gains for the two parties (the advertisers and the merged streaming services) from reaching an agreement with the advertisers are $14. According to the nonstrategic view of bargaining, each merged streaming service will earn $ This gain to the merged streaming service is in an agreement with the advertisers. than the total gains to the individual streaming services pre-merger.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:1. Individual Problems 16-1
Two equal-sized streaming services have an overlap circulation of 10% (10% of the subscribers subscribe to both). Advertisers are willing to pay $15
to advertise in one service but only $29 to advertise in both, because they're unwilling to pay twice to reach the same subscriber. Suppose the
advertisers bargain by telling each service that they're going to reach agreement with the other service, whereby they pay the other streamer $14 to
advertise.
According to the nonstrategic view of bargaining, each streaming service would earn
agreement with the advertisers. The total gain for the two streaming services from reaching an agreement is $
of the $14 in value added by reaching an
Suppose the two streaming services merge. As such, the advertisers can no longer bargain by telling each streaming service that they're going to
reach agreement with the other service. Thus, the total gains for the two parties (the advertisers and the merged streaming services) from reaching
an agreement with the advertisers are $14.
According to the nonstrategic view of bargaining, each merged streaming service will earn $
This gain to the merged streaming service is
in an agreement with the advertisers.
than the total gains to the individual streaming services pre-merger.
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