In this study I explored the effects of the development of direct competition in the delivery of cable services to a small Arkansas city. The emergence of competition produced lower prices, better customer service, increased choices in programming, and technological improvements as the market structure moved from monopoly to duopoly and achieved an equilibrium in which each service company serves a 50% market share. Because neither firm is producing a profit under the current situation, I argue that in the long-run the competitors may switch to oligopolistic pricing behavior and focus on nonprice competition in an effort to achieve profitability.
ASJC Scopus subject areas
- Economics and Econometrics