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Monopoly Practises and Competitive Behaviour in the French Satellite Pay-TV Market

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  • Cincera, Michele
  • Noury, Abdul

Abstract

This Paper uses monthly data from a differentiated market dominated by a duopoly to analyse the nature of interactions between competitor firms. The incumbent, Canal Satellite, and the entrant, TPS, have dominated the French satellite pay-TV market, characterized by a monopoly until the end of 1997. This Paper investigates the effects of the entry and tests for collusive behaviour by means of non-nested methods in this duopoly with differentiated products. The main findings reject collusive behaviours in favour of Stackelberg competition with the incumbent as the leader. A preliminary comparison with the UK Satellite pay-TV market characterized by a monopoly indicates that prices are substantially lower in France. In view of our results, we argue that the difference can be explained by more competition between firms in the French case.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4174.

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Date of creation: Jan 2004
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Handle: RePEc:cpr:ceprdp:4174

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Keywords: competition; media; pay-tv; structural models;

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  1. Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc.
  2. Gasmi, F & Laffont, J J & Vuong, Q, 1992. "Econometric Analysis of Collusive Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 277-311, Summer.
  3. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, 2000. "TV-broadcasting competition and advertising," CORE Discussion Papers 2000006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Armstrong, Mark, 1999. "Competition in the Pay-TV Market," Journal of the Japanese and International Economies, Elsevier, vol. 13(4), pages 257-280, December.
  5. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
  6. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June.
  7. Waterman, David & Weiss, Andrew A., 1996. "The effects of vertical integration between cable television systems and pay cable networks," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 357-395.
  8. Author One David Harbord & Author Two Marco Ottaviani, 2002. "Contracts and Competition in the Pay-TV Market," Industrial Organization 0203005, EconWPA.
  9. Robert N. Rubinovitz, 1993. "Market Power and Price Increases for Basic Cable Service Since Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 1-18, Spring.
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