Abstract
This article investigates how private firms respond to potential entry from public firms. The article uses a dataset of over 3000 US cable TV systems to present evidence consistent with entry deterrence. Incumbent cable TV firms upgrade faster when located in markets with a potential municipal entrant. However, the same systems are then slower to offer new products enabled by the upgrade, suggesting upgrades in these markets occur for strategic reasons. Incumbent cable systems also upgrade faster in response to municipal entry threats than to private entry threats. Understanding how private firms respond to potential entry from public firms is especially important in light of recent US government entry into several industries.
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