AN INVESTIGATION OF THE RELATIONSHIP BETWEEN REGULATION AND PRICE, QUALITY, AND CONSUMER WELFARE IN CABLE TELEVISION
Data collected from the sample for the study must support the testing of three hypotheses. While the desired level of confidence will be the same for all three hypotheses, the acceptable margin of error and population variability in relation to each of the three issues to be tested will be different for each hypothesis. Thus, three calculations of required sample size were made. The largest calculated required sample was accepted as the required sample size for the study. The three calculations of required sample size are as follows:
1. Required sample to test change in cable television prices:
s = $35 (standard deviation of price change)
n = (zs/E)2 = [(2.58*35)/5]2 = (90.3/5)2 = (18.06)2
2. Required sample to test change in cable television quality:
s = .70 (standard deviation of quality change)
n = (zs/E)2 = [(2.58*.7)/.1]2 = (1.806/.1)2 = (18.06)2
3. Required sample to test change in cable television consumer welfare:
s = $23.30 (standard deviation of price change)
n = (zs/E)2 = [(2.58*23.30)/4]2 = (60.11/4)2 = (15.03)2
The level of confidence (99 percent) was selected to enhance the reliability of the analyses. The higher level of confidence was sought because of the type of data that will be analyzed. The standard deviations were derived using a range-based approach. Probable ranges for the values were identified from studies reported in the literature. Assumptions were made that the identified ranges reflected + three standard deviations. Therefore, the identified ranges were divided by six to derive approximate standard deviations. Acceptable margins of error were derived by beginning with 20 percent of the standard deviation and then adjusting downward to the nearest whole dollar (price and consumer welfare) or nearest 10 percent (quality perception).
The required sa...