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Testing the Effectiveness of Regulation and Competition on Cable Television Rates

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Author Info

  • John S. Ying

    () (Department of Economics,University of Delaware)

  • Mary T. Kelly

    () (Department of Economics, Villanova University)

Abstract

Regulation of the cable television industry was marked by remarkable periods of deregulation, re-regulation, and re-deregulation during the 1980s and 1990s. Using FCC firm-level survey data spanning 1993 to 2001, we model and econometrically estimate the effect of regulation and competition on cable rates. Our calculations indicate that while regulation lowered rates for small system operators, it raised them for medium and large systems. Meanwhile, competition consistently decreased rates from 5.6 to 8.8 percent, with even larger declines during periods of regulation. Our results suggest that competition is more effective than regulation in containing cable prices.

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File URL: http://www.lerner.udel.edu/economics/WorkingPapers/2007/UDWP2007-07.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 07-07.

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Length: 18 pages
Date of creation: Apr 2007
Date of revision:
Handle: RePEc:dlw:wpaper:07-07.

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Web page: http://www.lerner.udel.edu/departments/economics/
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Keywords: cable rates; regulation; competition;

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  1. Thomas W. Hazlett, 1986. "Competition Vs. Franchise Monopoly In Cable Television," Contemporary Economic Policy, Western Economic Association International, vol. 4(2), pages 80-97, 04.
  2. Beard, T Randolph, et al, 2001. "Price-Quality Tradeoffs and Welfare Effects in Cable Television Markets," Journal of Regulatory Economics, Springer, vol. 20(2), pages 107-23, September.
  3. William M. Emmons III & Robin A. Prager, 1997. "The Effects of Market Structure and Ownership on Prices and Service Offerings in the U.S. Cable Television Industry," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 732-750, Winter.
  4. Levin, Stanford L. & Meisel, John B., 1991. "Cable television and competition : Theory, evidence and policy," Telecommunications Policy, Elsevier, vol. 15(6), pages 519-528, December.
  5. 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 157-80, March.
  6. Gregory S. Crawford, 2000. "The Impact of the 1992 Cable Act on Household Demand and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 422-450, Autumn.
  7. 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.
  8. Adam B. Jaffe & David M. Kanter, 1990. "Market Power of Local Cable Television Franchises: Evidence from the Effects of Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 226-234, Summer.
  9. Chipty, Tasneem, 1995. "Horizontal Integration for Bargaining Power: Evidence from the Cable Television Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(2), pages 375-97, Summer.
  10. Bruce M. Owen & Peter R. Greenhalgh, 1986. "Competitive Considerations In Cable Television Franchising," Contemporary Economic Policy, Western Economic Association International, vol. 4(2), pages 69-79, 04.
  11. Beil, Richard O, Jr, et al, 1993. "Competition and the Price of Municipal Cable Television Services: An Empirical Study," Journal of Regulatory Economics, Springer, vol. 5(4), pages 401-15, December.
  12. John W. Mayo & Yasuji Otsuka, 1991. "Demand, Pricing, and Regulation: Evidence from the Cable TV Industry," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 396-410, Autumn.
  13. Mary T. Kelly & John S. Ying, 2003. "On Measuring Competitive Viability and Monopoly Power in Cable: An Empirical Cost Approach," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 962-970, November.
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