The Deterrent Effect of Cable System Clustering on Overbuilders: An Economic Analysis of Behrend v. Comcast

Philip Reny () and Michael Williams ()
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Michael Williams: Competition Economics LLC

Economics Bulletin, 2015, vol. 35, issue 1, 519-527

Abstract: Empirical research on cable industry prices demonstrates that, all else equal, cable operators with highly clustered systems generally charge higher prices than unclustered cable companies. One factor that explains this outcome is the deterrent effect that clustering has on overbuilders. All else equal, the presence of overbuilders leads incumbent cable operators to lower their cable prices. We present a model of overbuilding that provides a theoretical basis for the empirical finding that clustered cable companies charge higher prices than unclustered cable companies. The model played an important role in the prominent antitrust case Behrend v. Comcast.

Keywords: cable industry; market power; strategic entry deterrence; overbuilders (search for similar items in EconPapers)
JEL-codes: C7 L1 (search for similar items in EconPapers)
Date: 2015-03-11
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