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Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry

  • Andrew Sweeting

The ability of firms to reposition their products can determine the effects of demand shocks, mergers and policy interventions in differentiated product markets. This paper estimates a dynamic oligopoly model to measure repositioning costs in the commercial radio industry. Based on a set of markets where industry revenues were around $88 billion, I find that stations may have spent as much as $6 billion on repositioning. However, repositioning costs are not large enough to prevent radio markets adapting quite quickly to demand shocks.

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File URL: http://www.nber.org/papers/w13522.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13522.

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Date of creation: Oct 2007
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Handle: RePEc:nbr:nberwo:13522
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