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Programming and Advertising Competition in the Broadcasting Industry

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Author Info
Jean J. Gabszewicz
Didier Laussel
Nathalie Sonnac

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Abstract

We analyze competition between two private television channels that derive their profits from advertising receipts. These profits are shown to be proportional to total population advertising attendance. The channels play a sequential game in which they first select their profiles (program mixes) and then their advertising ratios. We show that these ratios play the same role as prices in usual horizontal differentiation models. We prove that whenever ads' interruptions are costly for viewers the program mixes of the channels never converge but that the niche strategies are less effective and that the channel "profiles" are closer as advertising aversion becomes stronger. Copyright Blackwell Publishing 2004.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Economics & Management Strategy.

Volume (Year): 13 (2004)
Issue (Month): 4 (December)
Pages: 657-669
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Handle: RePEc:bla:jemstr:v:13:y:2004:i:4:p:657-669

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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  1. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers in Economics 963, University of Munich, Department of Economics. [Downloadable!]
  2. Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers 5223, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2005. "Financing of Media Firms: Does Competition Matter?," CIE Discussion Papers 2005-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  4. Nagler, Matthew, 2006. "Understanding the Internet's relevance to media ownership policy: a model of too many choices," MPRA Paper 2180, University Library of Munich, Germany. [Downloadable!]
  5. Gomes, Orlando, 2006. "The dynamics of television advertising with boundedly rational consumers," MPRA Paper 2847, University Library of Munich, Germany. [Downloadable!]
  6. Kind, Hans Jarle & Nilssen, Tore & Sørgard, Lars, 2005. "Advertising on TV: Under- or Overprovision?," Memorandum 15/2005, Oslo University, Department of Economics. [Downloadable!]
  7. Anthony J. Dukes, 2005. "Media Concentration and Consumer Product Prices," CIE Discussion Papers 2005-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  8. Alexei Alexandrov, 2006. "Fat Products," Discussion Papers 1435, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  9. Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266. [Downloadable!]
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  10. Ascensión Andina-Díaz, 2007. "Reinforcement vs. change: The political influence of the media," Public Choice, Springer, vol. 131(1), pages 65-81, April. [Downloadable!] (restricted)
  11. Hoernig, Steffen & Valletti, Tommaso, 2006. "Mixing Media with Two-Part Tariffs," CEPR Discussion Papers 5437, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  12. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2006. "Competition for Viewers and Advertisers in a TV Oligopoly," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  13. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  14. Ulrich Kaiser, 2007. "Do Media Consumers Really Dislike Advertising? An Empirical Assessment of a Popular Assumption in Economic Theory," CIE Discussion Papers 2007-08, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
  15. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers 133, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  16. Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics. [Downloadable!]
  17. Vincenzo Visco Comandini, 2007. "Servizi postali," Rivista di Politica Economica, SIPI Spa, vol. 97(4), pages 257-314, July-Augu. [Downloadable!]
  18. Françoise Benhamou & Stéphanie Peltier, 2007. "How should cultural diversity be measured? An application using the French publishing industry," Journal of Cultural Economics, Springer, vol. 31(2), pages 85-107, June. [Downloadable!] (restricted)
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