Race and radio: Preference externalities, minority ownership, and the provision of programming to minorities

Market provision of radio programming is beset by possible inefficient underprovision of formats that appeal to small audiences, for which the social benefits of programming - but not advertising revenue - exceed their costs. Larger markets have more programming, so their listeners derive benefits from being in the same market as others with similar preferences, a mechanism we term "preference externalities." Yet, because white and minority content preferences are substantially different, preference externalities are positive only within group. We expect problems of inefficient underprovision to be more likely for small minority populations. We find evidence that policies promoting minority ownership increase the amount of minority-targeted programming.