THE television broadcasting industry is similar to other oligopolistic industries in that in the absence of high barriers to entry, high profits among existing firms should cause new firms to enter the industry. On the other hand, it is different from oligopolistic manufacturing industries in that under current regulation by the Federal Communications Commission new firms can not enter any market without a license from the FCC and existing firms typically can not expand their quantity of output in response to rising demand. Once a television station is broadcasting the maximum number of hours per day and using a powerful transmitter to cover the largest area allowed in a particular market, it has no way to reach a larger potential audience. It can not legally build a second transmitter and simultaneously broadcast a second set of programs in the same market. On the other hand, of course, it can change the quality of its programs in order to attract a larger share of the available audience. Suppose we wish to predict whether a new station will enter a market where several stations are already broadcasting. One condition for new entry is that the potential station be able to obtain a license from the FCC. The lack of such a license is an absolute (legal) barrier to entry in any television market. This is an important consideration because the FCC determines in advance through an allocation table the maximum number of stations which shall be allowed in any market, and there are presently markets with no unused allocations available, and therefore no possibility of new entry into the market. Such markets include most of the largest io cities in the U.S. On the other hand, where barriers to entry are not too substantial, high profits should lead to new entry, particularly since existing firms can not increase the quantity of their output. A naive but still useful model of the broadcasting industry can be developed based on the assumption that each firm including any new entrant obtains an equal share of the market. Moreover, for the purpose of this model it is assumed that all firms have equal operating costs, viewing audience, revenue and profits. This model is naive because in reality in any market with four