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Is Radio Advertising a Distinct Local Market? An Empirical Analysis

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Abstract

The recent relaxation of regulations limiting the ability of an entity to own multiple radio stations has led to a dramatic increase in ownership concentration in local radio markets. As a result, the Department of Justice has, on several occasions, required limited divestiture of multiple station owners. Implicit in the agency's action is that radio advertising constitutes an antitrust market. Using the framework established by the Merger Guidelines, this paper evaluates whether or not radio advertising is a distinct local market by estimating an own-price elasticity of demand for radio advertising. Our results support the assertion that radio advertising is an antitrust market.

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Authors and Affiliations

  1. Department of Economics, Auburn, 203 Lowder Business Bldg, University, AL, 36849, U.S.A

    Robert B. Ekelund Jr. & John D. Jackson

  2. MCI Telecommunications, 1801 Pennsylvania Ave NW, Washington, DC, 20006, U.S.A

    George S. Ford

Authors
  1. Robert B. Ekelund Jr.
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  2. George S. Ford
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  3. John D. Jackson
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Ekelund, R.B., Ford, G.S. & Jackson, J.D. Is Radio Advertising a Distinct Local Market? An Empirical Analysis. Review of Industrial Organization 14, 239–256 (1999). https://doi.org/10.1023/A:1007700822663

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  • DOI: https://doi.org/10.1023/A:1007700822663

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