Do mergers increase product variety? Evidence from radio broadcasting

Steven T. Berry, Joel Waldfogel

Research output: Contribution to journalArticlepeer-review

128 Scopus citations

Abstract

Mergers can reduce costs and alter incentives about how to position products, so that theory alone cannot predict whether mergers will increase product variety. We document the effect of mergers on variety by exploiting the natural experiment provided by the 1996 Telecommunications Act. We find that consolidation reduced station entry and increased the number of formats available relative to the number of stations. We find some evidence that increased concentration increases variety absolutely. Based on the programming overlap of jointly owned stations, we can infer that the effects operate through product crowding that is consistent with spatial preemption.

Original languageEnglish (US)
Pages (from-to)1009-1025
Number of pages17
JournalQuarterly Journal of Economics
Volume116
Issue number3
DOIs
StatePublished - Aug 2001

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