COMPETITIVE CONSIDERATIONS IN CABLE TELEVISION FRANCHISING

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.

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