Cable Ownership Rules : A Bargaining Theory Approach

The Federal Communications Commission exercises broad regulatory authority over merger activity in the cable broadcast industry. In previous rule-makings and court proceedings, the Commission has emphasized concern about the potential for collusive behavior among cable operators in considering merger applications and horizontal ownership limits. Recent court rulings direct the Commission to develop plausible alternative economic approaches, and we explore one such alternative approach, specifically bargaining theory. We suggest that bargaining theory may offer greater insights than the collusion hypothesis for guiding policy-makers in constructing appropriate ownership limits