Efficiency Gain from Ownership Deregulation: Estimates for the Radio Industry

32 Pages Posted: 9 Jun 2008

See all articles by Howard W. Smith

Howard W. Smith

University of Oxford - Department of Economics

Catherine O'Gorman

University of Oxford - Department of Economics

Date Written: February 2008

Abstract

Reducing fixed cost duplication - a common justification for concentrated market structure - motivated the US government to relax the number of radio stations a firm could operate in any local market. After deregulation the number of firms per market decreased. The implied cost saving depends on the per market fixed costs incurred by each firm. Using data from 140 markets we estimate upper and lower bounds to fixed costs using (i) an empirical model of gross profit and (ii) the assumption that the observed post-deregulation market structure is a Nash equilibrium. The estimates suggest that the efficiency savings were significant.

Keywords: moment inequalities

JEL Classification: L10, L40, L82

Suggested Citation

Smith, Howard W. and O'Gorman, Catherine, Efficiency Gain from Ownership Deregulation: Estimates for the Radio Industry (February 2008). CEPR Discussion Paper No. DP6699, Available at SSRN: https://ssrn.com/abstract=1141021

Howard W. Smith

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Catherine O'Gorman (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
872
PlumX Metrics