Monopoly Versus Duopoly in Sports Broadcasting: Consumer Surplus Implications

Abstract

The sale of sports broadcasting rights typically involves two distinct stages: first, rights are allocated by sports leagues to broadcasters; second, broadcasters market their content to consumers. This paper focuses on the downstream stage, analyzing how consumer surplus depends on whether a single broadcaster (monopoly) offers the entire product, e.g., the entire league, or multiple broadcasters (duopoly) hold exclusive packages (i.e., exclusive subset of matches). In the latter case, consumers interested in the entire product must subscribe to both firms’ offers to fully reconstruct it. We show that consumer surplus under monopoly exceeds that under duopoly when consumer valuations for the entire product are sufficiently high relative to the valuations for single components (i.e., exclusive subset of matches) and when marginal costs are low. Conversely, when the added value of the entire product compared to the single components is not sufficiently high or marginal costs are higher, duopoly benefit consumers.