Handbook of Media Economics, vol 1A

size—would be expected to change media markets. In Section 1.3 we turn to “results,”

i.e., empirical evidence on the questions illuminated by the theoretical models. We dis-

cuss empirical results on entry and preference externalities that speak to the predictions,

we discuss the effects of technological change, and we suggest directions for future work.

1.2. FIXED COSTS AND HETEROGENEOUS PREFERE NCES

1.2.1 Fixed Costs

Media outlets, such as newspapers and radio and television stations, have cost structures

that are predominantly fixed. The cost of putting together a daily newspaper is based

mostly on the staff of reporters and editors, and this cost does not vary directly with

the number of copies produced (although a newspaper with more content