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Testing the Effectiveness of Regulation and Competition on Cable Television Rates

Author

Listed:
  • Mary T Kelly

    (Department of Economics, Villanova University, Villanova, PA 19085, USA)

  • John S Ying

    (Department of Economics, University of Delaware, Newark, DE 19716, USA)

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 Federal Communications Commission firm-level survey data spanning 1993–2001, we model and econometrically estimate the effect of regulation and competition on cable rates. Our calculations indicate that although 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.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:easeco:v:40:y:2014:i:3:p:387-404
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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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