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Abstract
The central theme of this dissertation is whether geographic market diversification of the US largest cable TV operators leads to the realization of interdependence and forbearance that affect pricing behavior. A model of price and quantity is estimated for a sample of 27 currently large operating systems in 40 regional markets. Annually data in two time periods; 1987 and 1992 are used for these cable operators.
The empirical results found no support for the view forwarded by Edwards (1955) that diversification may enhance monopoly power and reduce the degree of competition. The collusive behavior is strongly rejected. In the contrary, the study suggests that in a concentrated industry such as cable TV, diversification of dominant firms of the market can lead to competitive pricing behavior.
