Optimal product variety in radio markets
| Autor: | Steven Berry, Alon Eizenberg, Joel Waldfogel |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
Empirical work business.industry media_common.quotation_subject 05 social sciences Broadcasting jel:L82 Social planner Variety (cybernetics) jel:L11 Microeconomics Product (business) Market structure Product differentiation Excess entry Radio jel:L13 0502 economics and business Quality (business) Business 050207 economics Welfare 050205 econometrics media_common |
| Zdroj: | The RAND Journal of Economics. 47:463-497 |
| ISSN: | 0741-6261 |
| DOI: | 10.1111/1756-2171.12134 |
| Popis: | A vast theoretical literature shows that inefficient market structures may arise in free entry equilibria. Previous empirical work demonstrated that excessive entry may obtain in local radio markets. Our paper extends that literature by relaxing the assumption that stations are symmetric, allowing instead for endogenous station differentiation along both (observed) horizontal and (unobserved) vertical dimensions. We find that, in most broadcasting formats, a social planner who takes into account the welfare of market participants (stations and advertisers) would eliminate 50%-60% of the stations observed in equilibrium. In 80%-94.9% of markets that have high quality stations in the observed equilibrium, welfare could be unambiguously improved by converting one such station into low quality broadcasting. In contrast, it is never unambiguously welfare-enhancing to convert an observed low quality station into a high quality one. This suggests local over-provision of quality in the observed equilibrium, in addition to the finding of excessive entry. |
| Databáze: | OpenAIRE |
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