Do mergers increase product variety? Evidence from radio broadcasting

Mergers can reduce costs and alter incentives about how to position product s, so that theory alone cannot predict whether mergers will increase produc t variety. We document the effect of mergers on variety by exploiting the n atural experiment provided by the 1996 Telecommunications Act. We find that consolidation reduced station entry and increased the number of formats av ailable relative to the number of stations. We find some evidence that incr eased concentration increases variety absolutely. Based on the programming overlap of jointly owned stations, we can infer that the effects operate th rough product crowding that is consistent with spatial preemption.