Effects of Mergers in Two-Sided Markets: Examination of the U.S. Radio Industry
University of California, Berkeley - Haas School of Business
August 26, 2013
This paper studies mergers in two-sided markets by estimating a structural supply-and-demand model using data from the 1996-2006 merger wave in U.S. radio. It makes two main contributions. First, it identifies the conflicting incentives of merged firms to exercise market power on both sides of the market (listeners and advertisers). Second, it disaggregates the effects of mergers into changes in product variety and changes in supplied ad quantity. I find that between 1996 and 2006 listener welfare increased by 0.2% ( 0.3% from extra variety, -0.1% from changes in ad quantity) and advertiser welfare decreased by 21% per-year (it is composed of 17% drop from variety changes, and extra 5% drop from ad quantity adjustments).
Number of Pages in PDF File: 61
Keywords: horizontal mergers, antitrust, two-sided markets, radio, advertising
JEL Classification: L82, L41, L13
Date posted: November 1, 2010 ; Last revised: December 2, 2014