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Market Power in Radio Markets: An Empirical Analysis of Local and National Concentration

Listed author(s):
  • Ekelund, Robert B, Jr
  • Ford, George S
  • Koutsky, Thomas

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. Copyright 2000 by the University of Chicago.

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File URL: http://dx.doi.org/10.1086/467451
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Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 43 (2000)
Issue (Month): 1 (April)
Pages: 157-184

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Handle: RePEc:ucp:jlawec:v:43:y:2000:i:1:p:157-84
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Robert Ekelund & George Ford & John Jackson, 1999. "Is Radio Advertising a Distinct Local Market? An Empirical Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(3), pages 239-256, May.
  2. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
  3. Adam B. Jaffe & David M. Kanter, 1990. "Market Power of Local Cable Television Franchises: Evidence from the Effects of Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 226-234, Summer.
  4. Joe S. Bain, 1951. "Relation of Profit Rate to Industry Concentration: American Manufacturing, 1936–1940," The Quarterly Journal of Economics, Oxford University Press, vol. 65(3), pages 293-324.
  5. Schmalensee, Richard, 1987. "Collusion versus Differential Efficiency: Testing Alternative Hypotheses," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 399-425, June.
  6. Martin, Stephen, 1988. "Market Power and/or Efficiency?," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 331-335, May.
  7. Harvey J. Levin, 1964. "Economic Effects of Broadcast Licensing," Journal of Political Economy, University of Chicago Press, vol. 72, pages 151-151.
  8. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
  9. Smirlock, Michael & Gilligan, Thomas & Marshall, William, 1984. "Tobin's q and the Structure-Performance Relationship," American Economic Review, American Economic Association, vol. 74(5), pages 1051-1060, December.
  10. McCall, Alan S. & Peterson, Manfred O., 1980. "A critical level of commercial bank concentration : An application of switching regressions," Journal of Banking & Finance, Elsevier, vol. 4(4), pages 353-369, December.
  11. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
  12. Robert N. Rubinovitz, 1993. "Market Power and Price Increases for Basic Cable Service Since Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 1-18, Spring.
  13. Ravenscraft, David J, 1983. "Structure-Profit Relationships at the Line of Business and Industry Level," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 22-31, February.
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