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Market Power in Radio Markets: An Empirical Analysis of Local and National Concentration

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  • Ekelund, Robert B, Jr
  • Ford, George S
  • Koutsky, Thomas

Abstract

The Telecommunications Act of 1996 contains provisions that allow increasing levels of concentration in local radio markets. Debate has focused on whether allowing greater concentration of broadcast media resources into fewer hands is a sound public policy. One fear of regulators is the effect of increased concentration on the market power of radio stations. Concentrating on intraindustry variations, this paper systematically assesses the link between radio station profitability and market concentration. The underlying assumption of the empirical analysis is that sale price (or present value) of the radio station includes the present value of future profits. The results do not support a strong relationship between increases in concentration and the profitability of radio stations, although we find group ownership to increase efficiency. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Ekelund, Robert B, Jr & Ford, George S & Koutsky, Thomas, 2000. "Market Power in Radio Markets: An Empirical Analysis of Local and National Concentration," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 157-184, April.
    • Handle: RePEc:ucp:jlawec:v:43:y:2000:i:1:p:157-84
    DOI: 10.1086/467451
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    References listed on IDEAS

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    1. Kasuga, Norihiro & Shishikura, Manabu, 2006. "Determinants of profit in the broadcasting industry: Evidence from Japanese micro data," Information Economics and Policy, Elsevier, vol. 18(2), pages 216-228, June.
    2. Dennis Halcoussis & Anton Lowenberg, 2003. "The quantity and quality of radio broadcasting: are small markets underprovided?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 10(3), pages 347-357.
    3. Smith, Howard & O'Gorman, Catherine, 2008. "Efficiency Gain from Ownership Deregulation: Estimates for the Radio Industry," CEPR Discussion Papers 6699, C.E.P.R. Discussion Papers.
    4. Robert Seamans & Feng Zhu, 2014. "Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers," Management Science, INFORMS, vol. 60(2), pages 476-493, February.

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