Journal
RAND JOURNAL OF ECONOMICS
Volume 41, Issue 2, Pages 372-397Publisher
WILEY-BLACKWELL PUBLISHING, INC
DOI: 10.1111/j.1756-2171.2010.00104.x
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This article shows that mergers between close competitors in the music radio industry lead to important changes in product positioning. Firms that buy competing stations tend to differentiate them and, consistent with the firm wanting to reduce audience cannibalization, their combined audience increases. However, the merging stations also become more like competitors, so that aggregate variety does not increase, and the gains in market share come at the expense of other stations in the same format. The results shed light on the effects of mergers and, more broadly, on how multiproduct firms may use product positioning as a competitive tool.
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