The impact of the 1992 Cable Act on household demand and welfare

I measure the benefit to households of the 1992 Cable Act in light of strat egic responses by cable systems to the regulations mandated by the act. A d iscrete-choice differentiated-product model of household demand for all off ered cable television services forms the basis of the analysis. Aggregation over households and service combinations to the level of the data permits estimation on a cross-section of cable markets from before and after the ac t. The results indicate that while the regulations mandated price reduction s of 10-17% for cable services, observed system responses yielded no change in household welfare. Post-act changes in cable prices are responsible for most of the difference.