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Optimal Divisionalization for Selling Networks of Cable Television Services

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Author Info
Joao Carlos Correia Leitao (University of Beira Interior)

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Abstract

In this article, a condition for the optimal division’s number is calculated, for a market with two cable operators who offer a network service. The rationale for justifying the partial covering of the national market from the cable operators is presented. Furthermore, a problem of moral hazard is revealed, which is able to appear through the implementation of franchising schemes with independent divisions. This is particularly interesting because it can be applied to several industries such as Cable Television and Entertainment, and other activities including Internet and Computer Games Centres, which offer Internet broadband access and network games.

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File URL: http://129.3.20.41/eps/io/papers/0403/0403004.pdf
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Publisher Info
Paper provided by EconWPA in its series Industrial Organization with number 0403004.

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Length: 17 pages
Date of creation: 09 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwpio:0403004

Note: Type of Document - pdf; pages: 17
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Web page: http://129.3.20.41

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Related research
Keywords: Cable Television Divisionalization Franchising.

Find related papers by JEL classification:
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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  3. Michael Katz & Joseph Farrell, 2001. "Competition or Predation? Schumpeterian Rivalry in Network Markets," Competition Policy Center, Working Paper Series CPC01-023, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
    Other versions:
  4. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law & Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
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  6. James A. Brickley & Frederick H. Dark & Michael S. Weisbach, 1991. "An Agency Perspective on Franchising," Financial Management, Financial Management Association, vol. 20(1), Spring.
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    Other versions:
  9. Klein, Benjamin, 1995. "The economics of franchise contracts," Journal of Corporate Finance, Elsevier, vol. 2(1-2), pages 9-37, October. [Downloadable!] (restricted)
  10. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-39, May. [Downloadable!] (restricted)
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  12. Brickley, James A. & Dark, Frederick H., 1987. "The choice of organizational form The case of franchising," Journal of Financial Economics, Elsevier, vol. 18(2), pages 401-420, June. [Downloadable!] (restricted)
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    Other versions:
  14. Corchon, Luis C., 1991. "Oligopolistic competition among groups," Economics Letters, Elsevier, vol. 36(1), pages 1-3, May. [Downloadable!] (restricted)
    Other versions:
  15. Veendorp, E C H, 1991. "Entry Deterrence, Divisionalization, and Investment Decisions," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 297-307, February. [Downloadable!] (restricted)
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  18. Dana, James D, Jr & Spier, Kathryn E, 2001. "Revenue Sharing and Vertical Control in the Video Rental Industry," Journal of Industrial Economics, Blackwell Publishing, vol. 49(3), pages 223-45, September. [Downloadable!] (restricted)
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