Rothbard On The Comcast and Time Warner MergerSubmitted by Jao171 on Mon, 02/24/2014 - 14:34
The media response to the news of the pending merger between cable giants Comcast and Time Warner has been mostly negative. The two cable and broadband suppliers currently operate in different markets, but this didn’t stop pundits from proclaiming a rise in pricing would result due to decreased competition.
Once the forty-five Billion dollar deal gains the seal of approval from the federal government the combined Comcast and Time Warner entity is expected to have about 30 million subscribers. The merger will give the entity access to 70% of U.S. households. Access to households is only one part of the equation. The other part is convincing customers to buy your products. Time Warner and Comcast have been struggling peddling one of their products in recent years. They have been selling pay-TV packages to fewer and fewer households over the past few years.
The entity that is formed at the completion of the merger will remain beholden to the laws of supply and demand as they strive to set a price that achieves market equilibrium. Murray Rothbard describes below, in an excerpt from Man, Economy, and State, how the number of firms or disagreements between firms in a given industry does not drive price. Rather the desire to make a profit by providing a service to customers drives the price.