Pricing and Multi-Market Contact in the Cable TV Industry

Robert Seamans

No 08-13, Working Papers from NET Institute

Abstract: This paper links empirical literature on the use of price as an entry deterring mechanism with literature on the effect of multi-market contact on competition. The analysis uses a dataset of cable TV system prices to provide evidence that incumbent cable TV firms use price to deter entry by telecom overbuilders as well as cities with municipal utilities. There is also some evidence that multi-market contact with telecom overbuilders results in lower prices. However, there is no evidence that incumbents use price to deter cable overbuilders. In addition to linking entry deterrence with multi-market contact, this study has two other unique features. First, it establishes entry deterrence using two techniques, one of which relies on theory by Ellison and Ellison (2008) on non-monotonic price decreases in response to entry probability. Second, it uses detailed price and channel data at the service tier level.

Keywords: price; entry; public enterprises; multi-market contact (search for similar items in EconPapers)
JEL-codes: L11 L13 L32 L82 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-10
New Economics Papers: this item is included in nep-com, nep-cul, nep-ind, nep-mic and nep-mkt
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