Beyond the Spectrum Constraint: Concentration and Entry in the Broadcasting Industry

Massimo Motta (massimo.motta@upf.edu) and Michele Polo

No 115, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: The broadcasting industry is still very concentrated all over the world, after 15 years in which new technologies and public policies allowed to overcome the constraint of limited availability of frequencies on the radio spectrum. We argue that the monopolistic competition set up, traditionally used to analyze the broadcasting industry, does not fit the empirical evidence. Instead we analyze the free entry equilibrium in a multistage game in which the decision on program quality (attractiveness) is crucial and the associated fixed costs are endogenously determined. We show that concentration might arise in the long run even in large markets despite entry is free.

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Journal Article: Beyond the Spectrum Constraint: Concentration and Entry in the Broadcasting Industry (2001)
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