Do Mergers Increase Product Variety? Evidence from Radio Broadcasting

Steven Berry () and Joel Waldfogel

The Quarterly Journal of Economics, 2001, vol. 116, issue 3, 1009-1025

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.

Date: 2001
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