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ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES -super-*

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Author Info

  • CLAUDE CRAMPES
  • CAROLE HARITCHABALET
  • BRUNO JULLIEN

Abstract

This paper presents a model of media competition with free entry when media platforms are financed both from advertising receipts and customers' subscriptions. We establish a relationship between the equilibrium levels of prices, advertising and entry, the welfare maximizing levels and the advertising technology. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising. We then extend the analysis along several dimensions: the price as a strategic variable on the market for advertising, free media platforms and the media quality dimension. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 57 (2009)
Issue (Month): 1 (03)
Pages: 7-31

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Handle: RePEc:bla:jindec:v:57:y:2009:i:1:p:7-31

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Cited by:
  1. Hans Jarle Kind & Guttorm Schjelderup & Frank Stähler, 2013. "Newspaper Differentiation and Investments in Journalism: The Role of Tax Policy," Economica, London School of Economics and Political Science, vol. 80(317), pages 131-148, 01.
  2. Simon P. Anderson & Joshua S. Gans, 2011. "Platform Siphoning: Ad-Avoidance and Media Content," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 1-34, November.
  3. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle & Peitz, Martin, 2011. "Media market concentration, advertising levels, and ad prices," Discussion Paper Series in Economics 24/2011, Department of Economics, Norwegian School of Economics.
  4. Emilio Calvano & Bruno Jullien, 2011. "Issues in on-line advertising and competition policy: a two-sided market perspective," Working Papers 427, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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