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Competitive Considerations In Cable Television Franchising

Author

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  • BRUCE M. OWEN
  • PETER R. GREENHALGH

Abstract

Franchising and renewing of franchises for cable television systems is an important urban policy issue. Of particular interest is whether franchise authorities ought to grant more than one franchise to provide cable service in a given area. This paper reports results of an empirical investigation into the cost structure of large, modern, urban cable systems. We find modest economies of scale in dimensions relevant to the feasibility of direct competition. The economies are not so large as to rule out the possibility that competition…whether direct or potential…can be an important disciplinary force in the marketplace. Copyright 1986 Western Economic Association International.

Suggested Citation

  • 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, April.
  • Handle: RePEc:bla:coecpo:v:4:y:1986:i:2:p:69-79
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1465-7287.1986.tb00843.x
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    References listed on IDEAS

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    1. Baseman, Kenneth C, 1981. "Sustainability and the Entry Process," American Economic Review, American Economic Association, vol. 71(2), pages 273-277, May.
    2. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    3. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    4. William S. Comanor & Bridger M. Mitchell, 1971. "Cable Television and the Impact of Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 154-212, Spring.
    5. William J. Baumol & Robert D. Willig, 1981. "Fixed Costs, Sunk Costs, Entry Barriers, and Sustainability of Monopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 96(3), pages 405-431.
    6. Robert W. Crandall & Lionel L. Fray, 1974. "A Reexamination of the Prophecy of Doom for Cable Television," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 264-289, Spring.
    7. Evans, David S & Heckman, James J, 1984. "A Test for Subadditivity of the Cost Function with an Application to the Bell System," American Economic Review, American Economic Association, vol. 74(4), pages 615-623, September.
    8. John C. Panzar & Robert D. Willig, 1977. "Free Entry and the Sustainability of Natural Monopoly," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 1-22, Spring.
    9. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-481, August.
    10. Baumol, William J & Bailey, Elizabeth E & Willig, Robert D, 1977. "Weak Invisible Hand Theorems on the Sustainability of Multiproduct Natural Monopoly," American Economic Review, American Economic Association, vol. 67(3), pages 350-365, June.
    11. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
    12. Salkever, David S., 1976. "The use of dummy variables to compute predictions, prediction errors, and confidence intervals," Journal of Econometrics, Elsevier, vol. 4(4), pages 393-397, November.
    13. Bailey, Elizabeth E, 1981. "Contestability and the Design of Regulatory and Antitrust Policy," American Economic Review, American Economic Association, vol. 71(2), pages 178-183, May.
    14. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
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    Cited by:

    1. Mary T Kelly & John S Ying, 2014. "Testing the Effectiveness of Regulation and Competition on Cable Television Rates," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(3), pages 387-404, June.
    2. Diane Bruce Anstine, 2001. "How Much Will Consumers Pay? A Hedonic Analysis of the Cable Television Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(2), pages 129-147, September.
    3. Donald J. Boudreaux and Robert B. Ekelund, 1994. "Cable Regulation," Cato Journal, Cato Journal, Cato Institute, vol. 14(1), pages 87-107, Spring/Su.
    4. repec:bla:jindec:v:65:y:2017:i:3:p:510-558 is not listed on IDEAS
    5. repec:eee:iepoli:v:39:y:2017:i:c:p:84-93 is not listed on IDEAS
    6. Hazlett, Thomas W., 1987. "Duopolistic Competition In Catv: Theory, Practice, And Policy," Working Papers 225809, University of California, Davis, Department of Agricultural and Resource Economics.

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