Is the price really at the whim of the company

Reference no: EM131021620

When homebuilders construct a new housing development, they usually sell to a single cable television company the rights to lay cable. As a result, anyone buying a home in that development is not able to choose between competing cable companies. Some cities have begun to ban such exclusive agreements. Williams Township, Pennsylvania, decided to allow any cable company to lay cable in the utility trenches of new housing developments. The head of the township board of supervisors argued: "What I would like to see and do is give the consumers a choice. If there's no choice, then the price [of cable] is at the whim of the provider." In a situation in which the consumers in a housing development have only one cable company available, is the price really at the whim of the company? Would a company in this situation be likely to charge, say, $500 per month for basic cable services? Briefly explain why or why not.

Reference no: EM131021620

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