TY - JOUR
T1 - Creating a public good to fight monopolization
T2 - The formation of Broadcast Music, Inc
AU - Kleit, A. N.
N1 - Funding Information:
★ Financial support from the Program on Telecommunications Policy, Institute of Governmental Affairs, University of California at Davis is gratefully acknowledged. I would also like to thank Jim Meehan for helpful comments, and Scott Guillory and Eric Walden for excellent research assistance.
PY - 2001
Y1 - 2001
N2 - Entry by vertical integration to defeat monopolization has played an important role in several antitrust cases. Yet the source of financing for such entry is unclear, given that the entrant represents a public good to the vertically related firms. While there are a number of theoretical and experimental studies on the private supply of a public good, there is little empirical estimation on this topic. This paper examis business contributions to the creation of Broadcast Music, Inc. (BMI) in 1940. BMI was created by broadcasters specifically to fight monopolization, and represented investment in a pure public good. This study finds that several factors led to contributions to create BMI. In particular, network affiliation increased the probability that a station would join BMI. There is also evidence stations in less competitive markets were more likely to join, indicating that the rents from the creation of BMI were less likely to be competed away in such markets.
AB - Entry by vertical integration to defeat monopolization has played an important role in several antitrust cases. Yet the source of financing for such entry is unclear, given that the entrant represents a public good to the vertically related firms. While there are a number of theoretical and experimental studies on the private supply of a public good, there is little empirical estimation on this topic. This paper examis business contributions to the creation of Broadcast Music, Inc. (BMI) in 1940. BMI was created by broadcasters specifically to fight monopolization, and represented investment in a pure public good. This study finds that several factors led to contributions to create BMI. In particular, network affiliation increased the probability that a station would join BMI. There is also evidence stations in less competitive markets were more likely to join, indicating that the rents from the creation of BMI were less likely to be competed away in such markets.
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U2 - 10.1023/A:1011146910605
DO - 10.1023/A:1011146910605
M3 - Article
AN - SCOPUS:0034915673
SN - 0889-938X
VL - 19
SP - 243
EP - 256
JO - Review of Industrial Organization
JF - Review of Industrial Organization
IS - 2
ER -