CHAPTER 8
Radio
Andrew Sweeting
Department of Economics, University of Maryland, College Park, MD, USA
Contents
8.1. Introduction 342
8.2. A Brief History of the Radio Industry in the United States 345
8.3. Data 352
8.4. The Effects of Industry Consolidation on Market Outcomes: Theoretical Considerations 356
8.5. Empirical Evidence on the Effects of Ownership Consolidation in Radio 359
8.5.1 The Effects of Local Market Consolidation on the Advertising Market 360
8.5.2 The Effects of Local Market Consolidation on Product Differentiation and Variety 364
8.5.3 The Effects of National Consolidation on Listeners and Advertisers 369
8.5.4 Economies of Scale and Scope 373
8.6. Excess Entry 375
8.7. Strategies for Retaining Listeners 376
8.8. Non-commercial Radio and the Effects of Competition Between Non-commercial and
Commercial Broadcasters 381
8.9. Effects of Radio on the Music Industry, and Cultural and Political Outcomes 384
8.9.1 Politics 385
8.9.2 Contemporary Music 386
8.10. Conclusions 391
Acknowledgments 392
References 392
Abstract
This chapter surveys the literature on the economics of radio, focusing on the broadcast industry in the
United States. The first parts of the chapter provide a history of the radio industry and its regulation, and
a guide to the data available for empirical research. The next part surveys the large empirical literature
analyzing the effects of the wave of consolidation that took place after the Telecommunications Act of
1996, explaining which empirical results appear robust (for example, the effects of local consolidation
on programming differentiation) and which remain unclear (for example, the effects of consolidation
on advertising prices and quantities). The remaining parts survey the literature on whether there are too
many radio stations; the strategies that stations use to boost the effectiveness of advertising; the effects
of non-commercial stations on the commercial sector; and the interaction between the radio and
music industries, including payola and copyright issues. The chapter emphasizes several topics that
seem ripe for additional research.
341
Handbook of Media Economics,Volume1A © 2016 Elsevier B.V.
ISSN 2213-6630,
http://dx.doi.org/10.1016/B978-0-444-62721-6.00008-1 All rights reserved.
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