In theory, free entry can lead to social inefficiency. We study the radio industry in a first attempt to quantify this inefficiency. Using cross-sectional data on advertising prices, the number of stations, and radio listening, we estimate the parameters of listeners' decisions and of firms'...

We present empirical techniques that are both familiar to students of industrial organization and useful for modeling of media markets. We first focus on demand estimation with discussion of various discrete choice models. We then turn to estimation of the demand for advertising. We next turn to...

In theory, free entry can lead to social inefficiency. When new products are substitutes for existing products, the business stolen from incumbents places a wedge between private and social benefits of entry. The business stealing effect can be offset if entry reduces prices or increases...