Media Concentration With Free Entry

Guillaume Roger

Journal of Media Economics, 2009, vol. 22, issue 3, 134-163

Abstract: This study develops a free-entry model of competition between media firms, characterizes its equilibrium, and establishes that the industry displays a natural tendency to concentrate. A merger of any 2 firms is strictly profit increasing. Therefore, incentives to consolidate, while maintaining distinct, costly locations (i.e., production units or content), exist. This study distinguishes between post-entry and ex ante consolidation and investigates the properties of the post-consolidation equilibrium. Some firms not involved in any merger may be forced to exit. So, although media mergers may not result in shutting down any of the merging outlets, they still may indirectly affect diversity.

Date: 2009
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DOI: 10.1080/08997760903129366

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