The quantity and quality of radio broadcasting: are small markets underprovided?

Small radio markets are characterized by less format variety and lower listening shares than larger markets. It is frequently argued that lack of format variety causes low listenership and that small markets consequently are underserved by commercial radio. However, if format variety is treated as endogenous, then the relatively low numbers of formats available in small markets might reflect underlying taste or lifestyle attributes rather than market failure. We argue that residents of smaller towns actually enjoy higher quality commercial broadcasts than their counterparts in large cities because radio stations in small markets play fewer commercials than big-city stations, ceteris paribus. To test this hypothesis we develop a measure of the average quantity of commercials played per station in each market area. Our findings confirm that listeners in small markets benefit from higher quality radio services than listeners in large markets, if high quality is defined as fewer commercial interruptions.