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A Welfare Analysis of Local Franchise and Other Types of Regulation: Evidence from the Cable TV Industry

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  • Otsuka, Yasuji

Abstract

By examining both price and the level of quality, this paper empirically determines the welfare implications of local franchise and other types of regulation that existed in the cable TV industry prior to federal deregulation (1987). Contrary to the popular belief that price regulation was effective but also lowered the quality of service, I find that prices were lower and the levels of service (measured by the number of imported distant channels and cable networks) were higher than the monopolistic ones. The paper also reveals some significant differences in the welfare improvements under the alternative regulatory regimes. Copyright 1997 by Kluwer Academic Publishers

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  • Otsuka, Yasuji, 1997. "A Welfare Analysis of Local Franchise and Other Types of Regulation: Evidence from the Cable TV Industry," Journal of Regulatory Economics, Springer, vol. 11(2), pages 157-180, March.
    • Handle: RePEc:kap:regeco:v:11:y:1997:i:2:p:157-80
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    Cited by:

    1. Mary T Kelly & John S Ying, 2014. "Testing the Effectiveness of Regulation and Competition on Cable Television Rates," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(3), pages 387-404, June.
    2. Xing Wan & Javier Cenamor & Jing Chen, 2017. "Exploring Performance Determinants of China’s Cable Operators and OTT Service Providers in the Era of Digital Convergence—From the Perspective of an Industry Platform," Sustainability, MDPI, vol. 9(12), pages 1-19, December.
    3. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    4. Diane Bruce Anstine, 2001. "How Much Will Consumers Pay? A Hedonic Analysis of the Cable Television Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(2), pages 129-147, September.
    5. Yasuji Otsuka, 1999. "Another Look at Local Franchise Regulation and State Commission Regulation: Do They Really Matter?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(4), pages 341-356, December.
    6. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    7. Yasuji Otsuka & Bradley Braun, 2002. "Taxation by Regulation and Regulation by Taxation: The Case of Local Cable TV Regulation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(1), pages 21-40, August.

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