An OPEC in Fantasyland? The NAB Television Code as Cartel

Abstract

The U.S. Justice Department filed suit against the National Association of Broadcasters in 1979, charging that its Television Code restricted the supply of advertising. Had the case, which was settled by consent decree in 1982, gone to trial under a "rule of reason," the cartel effects of the code would have been examined. This paper employs a "dummy endogenous variable" model to see if the code provided cartel benefits. The results suggest that subscribing stations received higher profits, but that these cannot be unambiguously ascribed to cartel effects of the code.