Market Power in Radio Markets: An Empirical Analysis of Local and National Concentration
Robert B. Ekelund
Auburn University - Department of Economics
George S. Ford
Phoenix Center for Advanced Legal & Economic Public Policy Studies
Connected Nation Inc.
September 10, 2010
Journal of Law and Economics, Vol. 43, No. 1, April 2000
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.
Number of Pages in PDF File: 28
JEL Classification: L51, L96Accepted Paper Series
Date posted: August 8, 2000 ; Last revised: September 13, 2010
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