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A Theory of Broadcast Media Concentration and Commercial Advertising

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  • Brendan M. Cunningham
  • Peter J. Alexander

Abstract

We analyze a model in which the interaction of broadcasters, advertisers, and consumers determines the level of nonadvertising broadcasting produced and consumed. Our main finding is that an increase in concentration in broadcast media industries may lead to a decrease in the total amount of nonadvertising broadcasting. The strength of this inverse relationship depends, in part, on the behavioral response of the consumers to changes in advertising intensities. We also present a numerical general equilibrium solution to our model and demonstrate a positive relationship between consumer welfare and the number of firms in the broadcast industry. Copyright 2004 Blackwell Publishing Inc..

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Bibliographic Info

Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 6 (2004)
Issue (Month): 4 (October)
Pages: 557-575

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Handle: RePEc:bla:jpbect:v:6:y:2004:i:4:p:557-575

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Cited by:
  1. Richard Schmidtke, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," CESifo Working Paper Series 1776, CESifo Group Munich.
  2. Brendan M. Cunningham, 2005. "Censorship: the Key to Lock-In?," Departmental Working Papers, United States Naval Academy Department of Economics 10, United States Naval Academy Department of Economics.
  3. Brown, Keith & Alexander, Peter J., 2005. "Market structure, viewer welfare, and advertising rates in local broadcast television markets," Economics Letters, Elsevier, Elsevier, vol. 86(3), pages 331-337, March.
  4. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Papers in Economics, University of Munich, Department of Economics 963, University of Munich, Department of Economics.
  5. Rennhoff, Adam D. & Wilbur, Kenneth C., 2012. "Local media ownership and media quality," Information Economics and Policy, Elsevier, Elsevier, vol. 24(3), pages 231-242.
  6. Amnon Levy & Michael R. Caputo & BenoƮt Pierre Freyens, 2013. "Royalties, Entry and Spectrum Allocation to Broadcasting," Economics Working Papers, School of Economics, University of Wollongong, NSW, Australia wp13-02, School of Economics, University of Wollongong, NSW, Australia.
  7. Schmidtke, Richard, 2006. "Two-Sided Markets with Pecuniary and Participation Externalities," Discussion Paper Series of 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 133, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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