A Welfare Analysis of Local Franchise and Other Types of Regulation: Evidence from the Cable TV Industry

By examining both price and the level of quality, this paper empirically determines the welfare implications of local franchise and other types of regulation that existed in the cable TV industry prior to federal deregulation (1987). Contrary to the popular belief that price regulation was effective but also lowered the quality of service, I find that prices were lower and the levels of service (measured by the number of imported distant channels and cable networks) were higher than the monopolistic ones. The paper also reveals some significant differences in the welfare improvements under the alternative regulatory regimes

Another Look at Local Franchise Regulation and State Commission Regulation: Do They Really Matter?

Local franchise regulation, firm-regulator relationship, market power,

Taxation by Regulation and Regulation by Taxation: The Case of Local Cable TV Regulation

Consumer welfare, regulation by taxation, taxation by regulation,

Taxation By Regulation And Regulation By Taxation: The Case Of Local Cable Tv Regulation

Until late 1986, municipalities played a major role in cable television regulation. Municipalities not only regulated pricing and quality decisions but also taxed cable systems in the forms of in-kind and in-cash concessions. These activities appear to fit well with the concept of taxation-by-regulation, which concludes that consumer welfare is reduced because of the rent seeking behavior of local politicians. At the same time however, the notion of regulation-by-taxation is equally plausible. That is, politicians may use taxation as a means to regulate the activity of a monopoly by limiting monopoly rents and improving consumer welfare. This article empirically separates these two effects and investigates the implications for consumer welfare

The effects of economic conditions and tax structures on state tax revenue flow

Tax portfolio literature has focused on deriving the optimal composition of the tax structure for a particular state. However, tax revenue flow is influenced by both tax structure and economic conditions which are unique for each state. Therefore, the literature has been unable to generalize the characteristics of optimal tax structures. This paper examines the contribution of a state\u27s economic condition, as well as the tax structure, to the growth and variability of tax revenue flow. In addition, the optimal tax portfolio is studied for changes in revenue growth targets and economic conditions. (JEL H7)

Demand, Pricing, and Regulation: Evidence from the Cable TV Industry

Subsequent to the nationwide deregulation of the cable TV industry, a number of questions have been raised concerning the conduct of cable firms. Answers to these questions turn upon a fundamental set of issues regarding the economic relationships of demand, pricing, and regulation. In this article, we empirically examine these relationships for the period prior to deregulation. A number of basic findings emerge. Among these, we find that the demand for basic cable service ranges from being generally inelastic in rural areas to elastic in large urban markets. The elasticity of demand for pay cable services is typically well in excess of unity. Also, while regulation did not lead to economically efficient (marginal cost) prices for basic cable service, it did act to keep prices below monopoly levels. Moreover, our examination reveals some significant differences in the effectiveness of the various types of regulation practiced in the pre-deregulation period.