Effects of Mergers in Two-Sided Markets: Examination of the U.S. Radio Industry

61 Pages Posted: 1 Nov 2010 Last revised: 2 Dec 2014

Przemyslaw Jeziorski

University of California, Berkeley - Haas School of Business

Date Written: August 26, 2013

Abstract

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).

Keywords: horizontal mergers, antitrust, two-sided markets, radio, advertising

JEL Classification: L82, L41, L13

Suggested Citation

Jeziorski, Przemyslaw, Effects of Mergers in Two-Sided Markets: Examination of the U.S. Radio Industry (August 26, 2013). Available at SSRN: https://ssrn.com/abstract=1700763 or http://dx.doi.org/10.2139/ssrn.1700763

Przemyslaw Jeziorski (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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