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Monopoly Quality Degradation and Regulation in Cable Television

  • Crawford, Gregory S
  • Shum, Matthew

Using an empirical framework based on the Mussa-Rosen model of monopoly quality choice, we calculate the degree of quality degradation in cable television markets and the impact of regulation on those choices. We find lower bounds of quality degradation ranging from 11 to 45 percent of offered service qualities. Furthermore, cable operators in markets with local regulatory oversight offer significantly higher quality, less degradation, and greater quality per dollar, despite higher prices.

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File URL: http://dx.doi.org/10.1086/508310
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Article provided by University of Chicago Press in its journal Journal of Law and Economics.

Volume (Year): 50 (2007)
Issue (Month): 1 (February)
Pages: 181-219

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Handle: RePEc:ucp:jlawec:y:2007:v:50:i:1:p:181-219
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Thomas W. Hazlett & Matthew L. Spitzer, 1997. "Public Policy toward Cable Television," Books, American Enterprise Institute, number 53139, October.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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  13. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, March.
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  18. Leland L. Johnson, 1994. "Toward Competition in Cable Television," Books, American Enterprise Institute, number 52751, October.
  19. David Besanko & Shabtai Donnenfeld & Lawrence J. White, 1987. "Monopoly and Quality Distortion: Effects and Remedies," The Quarterly Journal of Economics, Oxford University Press, vol. 102(4), pages 743-767.
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