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Efficiency Gain from Ownership Deregulation: Estimates for the Radio Industry

  • Howard Smith
  • Catherine O'Gorman

Reducing fixed cost duplication - a common justification for concentrated market structure - motivated the US government to relax the number of radio stations a firm could operate in any local market.� After deregulation the number of firms per market decreased.� The implied cost saving depends on the per market fixed costs incurred by each firm.� Using data from 140 markets we estimate upper and lower bounds to fixed costs using (i) an empirical model of gross profit and (ii) the assumption that the observed post-deregulation market structure is a Nash equilibrium.� The estimates suggest that the efficiency savings were significant.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 385.

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Date of creation: 01 Jan 2008
Date of revision:
Handle: RePEc:oxf:wpaper:385
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  1. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  2. Ekelund, Robert B, Jr & Ford, George S & Koutsky, Thomas, 2000. "Market Power in Radio Markets: An Empirical Analysis of Local and National Concentration," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 157-84, April.
  3. repec:tpr:qjecon:v:116:y:2001:i:3:p:1009-1025 is not listed on IDEAS
  4. Steven Berry & Joel Waldfogel, 1996. "Free Entry and Social Inefficiency in Radio Broadcasting," NBER Working Papers 5528, National Bureau of Economic Research, Inc.
  5. Davis, Peter, 2006. "Estimation of quantity games in the presence of indivisibilities and heterogeneous firms," Journal of Econometrics, Elsevier, vol. 134(1), pages 187-214, September.
  6. Thomas J. Holmes, 2006. "The Diffusion of Wal-Mart and Economies of Density," 2006 Meeting Papers 15, Society for Economic Dynamics.
  7. Panle Jia, 2008. "What Happens When Wal-Mart Comes to Town: An Empirical Analysis of the Discount Retailing Industry," Econometrica, Econometric Society, vol. 76(6), pages 1263-1316, November.
  8. Rysman, Marc & Greenstein, Shane, 2005. "Testing for agglomeration and dispersion," Economics Letters, Elsevier, vol. 86(3), pages 405-411, March.
  9. Schaumans, Catherine & Verboven, Frank, 2006. "Entry and Regulation - Evidence from Health Care Professions," CEPR Discussion Papers 5482, C.E.P.R. Discussion Papers.
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