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Market Power of Local Cable Television Franchises: Evidence from the Effects of Deregulation


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  • Adam B. Jaffe
  • David M. Kanter


The 1989 Cable Act eliminated most price regulation of cable television operators, including the right of municipalities to enforce price terms in franchise agreements. Deregulation was justified, at least partially, by the contention that competition from other entertainment media eliminated any market power of cable franchises. We examine the value at sale of existing cable systems before and after deregulation. Assuming that this value represents the expected present value of future profits, deregulation had the predicted negligible effect on profits in cities with significant broadcast competition. However, profits appear to have increased in areas where the competition from broadcast television was less severe. We explore several explanations for this increase and conclude that significant market power is the most plausible explanation.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 21 (1990)
Issue (Month): 2 (Summer)
Pages: 226-234

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Handle: RePEc:rje:randje:v:21:y:1990:i:summer:p:226-234

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Cited by:
  1. Mary T. Kelly & John S. Ying, 2013. "Testing the Effectiveness of Regulation and Competition on Cable Television Rates," Working Papers, University of Delaware, Department of Economics 13-06, University of Delaware, Department of Economics.
  2. Mary T. Kelly & John S. Ying, 2009. "Testing the Effectiveness of Regulation and Competition on Cable Television Rates," Villanova School of Business Department of Economics and Statistics Working Paper Series, Villanova School of Business Department of Economics and Statistics 3, Villanova School of Business Department of Economics and Statistics.


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