How is it exactly that cable companies in the US don’t compete?

[Commentary] One of the arguments made in the proposed Comcast-Time Warner merger is that these two, very large cable companies do not actually compete.

They are in different markets. This is something Tyler Cowen, for example, has pushed as a reason the merger should go ahead.

Now this might be a good argument as to why, straight out horizontal stories won’t cut it to prevent this merger and we would have to look elsewhere. But what should cause us to have pause was an issue raised in this excellent commentary on the state of the industry by John Oliver. The part I want to address is where John Oliver asks: how is it that cable companies are not competing? Potential competitors stay out of each other’s turf and divide the market.

This type of collusion is understudied in economics and, indeed, one of the implications is that it has consequences for mergers. Thus, those who say Comcast and Time Warner should merge because they don’t compete should also explain precisely why they don’t now and ought not to compete in the future.