TY  - JOUR
AU  - Berry,Steven T.
AU  - Waldfogel,Joel
TI  - Mergers, Station Entry, and Programming Variety in Radio Broadcasting
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7080
PY  - 1999
Y2  - April 1999
UR  - http://www.nber.org/papers/w7080
L1  - http://www.nber.org/papers/w7080.pdf
N1  - Author contact info:
Steven T. Berry
Yale University Department of Economics
Box 208264
37 Hillhouse Avenue
New Haven, CT 06520-8264
Tel: 203/432-3556
Fax: 203/432-6323
E-Mail: steven.berry@yale.edu

Joel Waldfogel
Frederick R. Kappel Chair in Applied Economics
3-177 Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Tel: 612/626-7128
E-Mail: jwaldfog@umn.edu
AB  - Free entry into markets with decreasing average costs and differentiated products can result in an inefficient number of firms and suboptimal product variety.  Because new firms and products draw their customers in part from existing products, concentration can affect incentives to enter as well as how to position products.  This paper examines how product variety in the radio industry is affected by changes in ownership structure. While it is in general difficult to measure the effect of concentration on other factors such as the number of products and the extent of product variety, the 1996 Telecommunications Act substantially relaxed local radio ownership restrictions, giving rise to a major and exogenous consolidation wave.  Between 1993 and 1997 the average Herfindahl index in major US media markets increased by almost 65 percent. Using a panel data set on 243 U.S. radio broadcast markets in 1993 and 1997, we find that concentration reduces entry and increases product variety.  Our results are consistent with spatial preemption.  Jointly owned stations broadcasting from the same market are more likely than unrelated stations - and more likely than jointly owned stations in different markets - to broadcast in similar formats.
ER  -