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Are Local TV Markets Separate Markets?

Author

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  • Robert Ekelund
  • George Ford
  • John Jackson

Abstract

In sweeping revisions the US Telecommunications Act of 1996 relaxed rules respecting broadcast TV ownership regulations. In particular Congress directed the Federal Communication Commission (FCC) to conduct a rulemaking on whether the 'duopoly rules' preventing businesses from owning multiple broadcast stations in the same market should be relaxed, modified or eliminated. Naturally, this directive raises questions concerning competition. Specifically, would concentration and consolidation of local media firms have deleterious effects on advertising rates, output and consumer choice? In the present paper we examine, using own-price and cross-price elasticity demand estimates, the question of whether local TV markets constitute a separate market for advertising. Our structural tests, with appropriate caveats, reveal that local TV advertising is not, by itself, a distinct market - one relevant for antitrust action.

Suggested Citation

  • Robert Ekelund & George Ford & John Jackson, 2000. "Are Local TV Markets Separate Markets?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 7(1), pages 79-97.
  • Handle: RePEc:taf:ijecbs:v:7:y:2000:i:1:p:79-97
    DOI: 10.1080/13571510084078
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    References listed on IDEAS

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    1. Stigler, George J & Sherwin, Robert A, 1985. "The Extent of the Market," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 555-585, October.
    2. Thompson, R S, 1984. "Structure and Conduct in Local Advertising Markets: The Case of Irish Provincial Newspapers," Journal of Industrial Economics, Wiley Blackwell, vol. 33(2), pages 241-249, December.
    3. Nelson, Charles R & Startz, Richard, 1990. "The Distribution of the Instrumental Variables Estimator and Its t-Ratio When the Instrument Is a Poor One," The Journal of Business, University of Chicago Press, vol. 63(1), pages 125-140, January.
    4. Froeb, L.M. & Werden, G.J., 1991. "Correlation, Causality, and all that Jazz: The Inherent Shortcomings of Price Tests for Antitrust Market Delineation," Papers 91-6, U.S. Department of Justice - Antitrust Division.
    5. Werden, G.J., 1992. "The History of Antitrust Market Delineation," Papers 92-8, U.S. Department of Justice - Antitrust Division.
    6. Baker, Jonathan B. & Bresnahan, Timothy F., 1988. "Estimating the residual demand curve facing a single firm," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 283-300.
    7. Thompson, R Stephen, 1989. "Circulation versus Advertiser Appeal in the Newspaper Industry: An Empirical Investigation," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 259-271, March.
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    Cited by:

    1. Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 323-348, June.
    2. Ivaldi, Marc & Zhang, Jiekai, 2015. "Advertising competition in the French free-to-air television broadcasting industry," TSE Working Papers 15-578, Toulouse School of Economics (TSE).
    3. Marc Ivaldi & Jiekai Zhang, 2017. "Advertising Competition in the Free-to-Air TV Broadcasting Industry," CESifo Working Paper Series 6461, CESifo Group Munich.
    4. 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.

    More about this item

    Keywords

    Telecommunications; Tv Advertising; Antitrust;

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