Economic Analysis of Loudness War

This thesis determines whether the loudness war phenomenon has an effect on the success of individual songs on the Billboard Hot 100 chart. Presented theoretical part introduces this rather technical problem to economists, an insight is provided into the distribution chain of music recordings as well as into the decision-making of consumers. The key factors determining the chart position are identified following the research of existing theory and are used to create an ordinary least squares model designed to answer the question mentioned above. Results of this model falsify the hypothesis that higher level of dynamic range compression leads to a better chart position. The loudness war is identified as a market failure.