The Federal Communications Commission (F.C.C.) is setting new regulations to open the cable television market to independent programmers and rival video services. The new rules will make it easier for small independent programmers to lease access to cable channels and the size of the nation’s largest cable companies will be capped at 30 percent of the market.
a. What barriers to entry exist in the cable television market?
b. Are high cable prices evidence of monopoly power?
c. Draw a graph to illustrate the effects of the F.C.C.’s new regulations on the price, quantity, total surplus, and deadweight loss.