The following information regarding cable television is from the Federal Communications Commission (FCC) Web site:
In general, a cable television operator has the right to select the channels and services that are available on its cable system. With the exception of certain channels like local broadcast television channels which are required to be carried by federal law, the cable operator has broad discretion in choosing which channels will be available and how those channels will be packaged and marketed to subscribers.... With the exception of programming that is required to be carried on the basic tier, the cable operator and the entity that owns the channel or programming service negotiate the terms and conditions for carriage on the cable system. Terms may include whether the channel or service will be offered in a package with other programming or whether the channel or service will be offered on a per-channel or payper-view basis.
Suppose you are a fan of The Daily Show with Jon Stewart and The Colbert Report, both on the Comedy Central cable channel, but the only way you can get Comedy Central from your local cable provider is to subscribe to a package that includes 30 other channels. Is there an externality involved here? If so, is it an externality in production or consumption, and is it positive or negative? If there is an externality, discuss possible solutions.
From Consumer and Government Affairs Bureau, "Choosing Cable Channels," www.fcc.gov/cgb/consumerfacts/cablechannels.html, November 6, 2008