EconPapers    
Economics at your fingertips  
 

Free Entry and Social Inefficiency in Radio Broadcasting

Steven Berry () and Joel Waldfogel ()

RAND Journal of Economics, 1999, vol. 30, issue 3, 397-420

Abstract: In theory, free entry can lead to social inefficiency. We study the radio industry in a first attempt to quantify this inefficiency. Using cross-sectional data on advertising prices, the number of stations, and radio listening, we estimate the parameters of listeners' decisions and of firms' profits. Relative to the social optimum, our estimates imply that the welfare loss (to firms and advertisers) of free entry is 45% of revenue. However, the free entry equilibrium would be optimal if the marginal value of programming to listeners were about three times the value of marginal listeners to advertisers.

Date: 1999
References: Add references at CitEc
Citations View citations in EconPapers (91) Track citations by RSS feed

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819992 ... O%3B2-M&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: Free Entry and Social Inefficiency in Radio Broadcasting (1996) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rje:randje:v:30:y:1999:i:autumn:p:397-420

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().

 
Page updated 2017-10-07
Handle: RePEc:rje:randje:v:30:y:1999:i:autumn:p:397-420