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Consolidation and Price Discrimination in the Cable Television Industry

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Author Info

  • David P.Byrne

Abstract

This paper measures the impact of consolidation on cable television prices, product quality,profits and consumer welfare. I estimate a multi-product monopoly model using panel data on cable menus and costs in Canada from 1990 to 1996. Using counterfactual simulations, I find mean consumer welfare rises with acquisitions, as does welfare inequality across consumers. Scale economies are the primary driver of consolidation effects quantitatively, with firm heterogeneity in demand and costs having a smaller impact. Regional consolidation yields non-negligible welfare gains, particularly in rural markets where potential cable quality improvements and cost reductions are the largest.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1118.

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Length: 36 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:mlb:wpaper:1118

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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
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Web page: http://www.economics.unimelb.edu.au
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Related research

Keywords: Consolidation; Price Discrimination; Economies of Scale; Firm Heterogeneity;

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References

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  1. Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
  2. Steven T. Berry & Joel Waldfogel, 2001. "Do Mergers Increase Product Variety? Evidence From Radio Broadcasting," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 1009-1025, August.
  3. Patrick Parsons, 2003. "Horizontal Integration in the Cable Television Industry: History and Context," Journal of Media Economics, Taylor & Francis Journals, vol. 16(1), pages 23-40.
  4. David Byrne, 2010. "Acquisitions as a Response to Deregulation: Evidence from the Cable Television Industry," Working Papers 1242, Queen's University, Department of Economics.
  5. Gregory S. Crawford, 2013. "Cable Regulation in the Internet Era," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 137-193 National Bureau of Economic Research, Inc.
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Cited by:
  1. Crawford, Gregory S., 2012. "Endogenous Product Choice : A Progress Report," The Warwick Economics Research Paper Series (TWERPS) 979, University of Warwick, Department of Economics.

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