The Virtuosity of Economics

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

I wonder if these guys ever list to the radio.  It must take an enormous
virtuosity to arrive at such a conclusion.


"Mergers, Station Entry, and Programming Variety in Radio
 Broadcasting"

      BY:  STEVEN BERRY
              Yale University
           JOEL WALDFOGEL
              University of Pennsylvania, Wharton School
              Public Policy and Management Department
              Yale University
>
>Paper ID:  NBER Working Paper No. 7080
    Date:  April 1999
>
 Contact:  STEVEN BERRY
   Email:  Mailto:steveb@xxxxxxxxxxxxx
  Postal:  Yale University
           New Haven, CT 06520-8323  USA
   Phone:  203-432-3556
     Fax:  203-432-6323
 Co-Auth:  JOEL WALDFOGEL
   Email:  Mailto:waldfogj@xxxxxxxxxxxxxxxxx
  Postal:  University of Pennsylvania, Wharton School
           Public Policy and Management Department
           Philadelphia, PA 19104-6372  USA
>
>Paper Requests:
 Full-Text Availability at http://www.nber.org/wwp.html Papers
 can be downloaded online for $5. Hard copies are $10 plus
 $10.00/order outside the USA. Prepayment required. NBER orders:
 Mailto:orders@xxxxxxxx Checks, Mastercard, Visa and American
 Express to 1050 Massachusetts Ave., Cambridge, MA 02138.
 Phone:(617)868-3900. Fax:(617)349-3955. For NBER Subscriptions
 Mailto:subs@xxxxxxxx or write to "Subscriptions" at address
 above.
>
>ABSTRACT:
 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.


--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx