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Testing the Effectiveness of Regulation and Competition on Cable Television Rates

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Author Info
Mary T. Kelly () (Department of Economics and Statistics, Villanova School of Business, Villanova University)
John S. Ying () (Department of Economics,University of Delaware)

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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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Publisher Info
Paper provided by Villanova School of Business Department of Economics and Statistics in its series Villanova School of Business Department of Economics and Statistics Working Paper Series with number 3.

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Date of creation: Apr 2009
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Handle: RePEc:vil:papers:3

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Web page: http://www.villanova.edu/business/facultyareas/economics/
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Related research
Keywords: cable rates; regulation; competition;

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Find related papers by JEL classification:
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  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. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
  5. 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.
  6. 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. [Downloadable!] (restricted)
  7. Zupan, Mark A, 1989. "Non-price Concessions and the Effect of Franchise Bidding Schemes on Cable Company Costs," Applied Economics, Taylor and Francis Journals, vol. 21(3), pages 305-23, March.
  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. [Downloadable!] (restricted)
  9. Chipty, Tasneem, 1995. "Horizontal Integration for Bargaining Power: Evidence from the Cable Television Industry," Journal of Economics & Management Strategy, Blackwell Publishing, 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. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  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, 08. [Downloadable!] (restricted)
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