Recognizing commercial radio (and advertiser-supported media more generally) as a two-sided market with a negative network effect presents a means to evaluate the welfare effects of regulatory and technological changes. Listeners would prefer to hear fewer advertisements, while advertisers want to reach as many listeners as possible.; It is necessary to consider the actions of all three types of actors to analyze the radio market---individuals who make listening and consumption decisions, firms that sell goods to individuals and purchase advertising from radio stations, and radio stations that broadcast programming to attract listeners and sell advertisements to firms. This unified approach provides a more thorough assessment of the industry's impact on social welfare.; In the model developed here, an increase in the number of radio stations---more competition---does not necessarily improve social welfare. Heightened competition among radio stations reduces the amount of advertising on each station, resulting in a lower surplus in the goods market. In general, the net welfare effect of radio station competition depends on the relative importance of individuals' listening and consumption choices. In the specific case considered here, the market will provide more stations than is socially optimal when it is costly to broadcast quality programming.; Panel data analysis of radio station listening and advertising sales confirms the two-sided nature of the market---the positive effect of listeners on advertising sales and the negative effect of advertising on listening. The data---on thirty markets over five years---also lend support to some of the model's findings on the effects of broadcasting quality and radio market competition on listener and advertiser behavior. Having an owner with more market power improves a radio station's performance in the listener market, but its effect in the advertising market is less transparent.
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