Measuring the Effect of Multimarket Contact on Competition: Evidence from Mergers following Radio Broadcast Ownership Deregulation

Joel Waldfogel, Julie Wulf

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

This paper examines the effects of multimarket contact on advertising prices in the U.S. radio broadcasting industry. While it is in general difficult to measure the effect of multimarket contact on competition, the 1996 Telecommunications Act substantially relaxed local radio ownership restrictions, giving rise to a major and exogenous consolidation wave. Between the years of 1995 to 1998, the average extent of multimarket contact in major U.S. media markets increased by 2.5 times. Importantly, the extent of change in multimarket contact varies across markets, and the change in multimarket contact varies separately from the change in concentration. Using a panel data set on 248 geographic U.S. radio broadcast markets, 1995-1998, we find that multimarket contact has little effect on advertising prices. This paper contributes to the empirical literature on multimarket contact by analyzing a different industrial context and using longitudinal data surrounding an ownership deregulation.

Original languageEnglish (US)
Article number17
JournalB.E. Journal of Economic Analysis and Policy
Volume5
Issue number1
DOIs
StatePublished - 2006
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2006 De Gruyter. All rights reserved.

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