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Market Provision of Broadcasting: A Welfare Analysis

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Author Info
Simon P. Anderson

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Abstract

This paper presents a theory of the market provision of broadcasting and uses it to address the nature of market failure in the industry. Equilibrium advertising levels may be too low or too high, depending on the nuisance cost to viewers, the substitutability of programmes, and the expected benefits to advertisers from contacting viewers. The equilibrium amount of programming may also be below or above the socially optimal level. Perhaps surprisingly, the ability to price programming may reduce social surplus, while monopoly ownership may increase it. Copyright The Review of Economic Studies Limited, 2005.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/0034-6527.00357
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 72 (2005)
Issue (Month): 4 (October)
Pages: 947-972
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Handle: RePEc:bla:restud:v:72:y:2005:i:4:p:947-972

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Maria Cancian & Angela Bills & Ted Bergstrom, 1995. "Hotelling Location Problems with Directional Constraints: An Application to Television News Scheduling," University of California at Santa Barbara, Economics Working Paper Series 1995C, Department of Economics, UC Santa Barbara. [Downloadable!]
    Other versions:
  2. Brown, Allan & Cave, Martin, 1992. "The Economics of Television Regulation: A Survey with Application to Australia," The Economic Record, The Economic Society of Australia, vol. 68(203), pages 377-94, December.
  3. Hansen, Claus Thustrup & Kyhl, Soren, 2001. "Pay-per-view broadcasting of outstanding events: consequences of a ban," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 589-609, March. [Downloadable!] (restricted)
  4. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," Review of Economic Studies, Blackwell Publishing, vol. 71(2), pages 483-512, 04. [Downloadable!] (restricted)
  5. Wright, Donald J, 1994. "Television Advertising Regulation and Program Quality," The Economic Record, The Economic Society of Australia, vol. 70(211), pages 361-67, December.
  6. Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Blackwell Publishing, vol. 51(1), pages 63-81, January. [Downloadable!] (restricted)
  7. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring. [Downloadable!] (restricted)
  8. Doyle, Chris, 1998. "Programming in a competitive broadcasting market: entry, welfare and regulation," Information Economics and Policy, Elsevier, vol. 10(1), pages 23-39, March. [Downloadable!] (restricted)
  9. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Blackwell Publishing, vol. 43(2), pages 217-35, June. [Downloadable!] (restricted)
  10. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06. [Downloadable!] (restricted)
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  11. Esther Gal-Or & Anthony Dukes, 2003. "Minimum Differentiation in Commercial Media Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(3), pages 291-325, 09. [Downloadable!] (restricted)
  12. Robert Ekelund & George Ford & John Jackson, 1999. "Is Radio Advertising a Distinct Local Market? An Empirical Analysis," Review of Industrial Organization, Springer, vol. 14(3), pages 239-256, May. [Downloadable!] (restricted)
  13. Wright, Julian, 2002. "Access Pricing under Competition: An Application to Cellular Networks," Journal of Industrial Economics, Blackwell Publishing, vol. 50(3), pages 289-315, September. [Downloadable!] (restricted)
  14. Beebe, Jack H, 1977. "Institutional Structure and Program Choices in Television Markets," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 15-37, February. [Downloadable!] (restricted)
  15. Steven T. Berry & Joel Waldfogel, 1999. "Free Entry and Social Inefficiency in Radio Broadcasting," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 397-420, Autumn. [Downloadable!] (restricted)
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  16. Massimo Motta & Michele Polo, 1997. "Concentration and public policies in the broadcasting industry: the future of television," Economic Policy, CEPR, CES, MSH, vol. 12(25), pages 293-334, October. [Downloadable!] (restricted)
  17. Gabszewicz, J.J. & Laussel, D. & Sonnac, N., 2000. "TV-Broadcasting Competition and Advertising," Papers 2000/6, Catholique de Louvain - Center for Operations Research and Economics.
  18. Mark Armstrong, 2005. "Competition in Two-Sided Markets," Industrial Organization 0505009, EconWPA. [Downloadable!]
    Other versions:
  19. Spence, A Michael & Owen, Bruce, 1977. "Television Programming, Monopolistic Competition, and Welfare," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 103-26, February. [Downloadable!] (restricted)
  20. Simon P. Anderson & Stephen Coate, 2000. "Market Provision of Public Goods: The Case of Broadcasting," NBER Working Papers 7513, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  21. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring. [Downloadable!] (restricted)
  22. Carl Shapiro, 1980. "Advertising and Welfare: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 749-752, Autumn. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Machiel van Dijk & Richard Nahuis & Daniël Waagmeester, 2005. "Does public service broadcasting serve the public? The future of television in the changing media landscape," CPB Discussion Papers 43, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
    Other versions:
  2. Kind, Hans Jarle & Schjelderup, Guttorm & Stähler, Frank, 2007. "Newspapers and Advertising: The Effects of Ad-Valorem Taxation under Duopoly," Discussion Papers 2007/5, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
    Other versions:
  3. Reisinger, Markus, 2004. "Two-Sided Markets with Negative Externalities," Discussion Papers in Economics 478, University of Munich, Department of Economics. [Downloadable!]
  4. CRAMPES, Claude & HARITCHABALET, Carole & JULLIEN, Bruno, 2006. "Advertising, Competition and Entry in Media Industries," IDEI Working Papers 374, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
  5. Mark Armstrong & Helen Weeds, 2005. "Public Service Broadcasting in the Digital World," Industrial Organization 0507010, EconWPA. [Downloadable!]
  6. Matthew Nagler, 2007. "Understanding the Internet's Relevance to Media Ownership Policy: A Model of Too Many Choices," Topics in Economic Analysis & Policy, Berkeley Electronic Press, vol. 7(1), pages 1663-1663. [Downloadable!] (restricted)
    Other versions:
  7. 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:
  8. Brendan M. Cunningham, 2005. "Censorship: the Key to Lock-In?," Departmental Working Papers 10, United States Naval Academy Department of Economics. [Downloadable!]
  9. Kind, Hans Jarle & Koethenbuerger, Marko & Schjelderup, Guttorm, 2008. "Efficiency Enhancing Taxation in Two-sided Markets," Discussion Papers 2008/1, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
  10. 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:
  11. Simon P. Anderson & André de Palma, 2007. "Information Congestion: open access in a two-sided market," THEMA Working Papers 2007-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise. [Downloadable!]
  12. Matthew Ellman & Fabrizio Germano, 2004. "What Do the Papers Sell?," Economics Working Papers 800, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2006. [Downloadable!]
  13. Mingchun Sun & Edison Tse, 2007. "When Does the Winner Take All in Two-Sided Markets?," Review of Network Economics, Concept Economics, vol. 6(1), pages 16-41, March. [Downloadable!]
  14. Eichhorn, Christoph & Sahm, Marco, 2007. "Why were FIFA World Cup Tickets so cheap?," Discussion Papers in Economics 1357, University of Munich, Department of Economics. [Downloadable!]
  15. Andrei Hagiu, 2004. "Two-Sided Platforms: Pricing and Social Efficiency," Discussion papers 04035, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  16. Simon P. Anderson & André de Palma, 2006. "Information Congestion," Virginia Economics Online Papers 364, University of Virginia, Department of Economics. [Downloadable!]
  17. Martin Bandulet, 2005. "On the Efficiency of Spam Mailing and Portal Advertising," Discussion Paper Series 275, Universitaet Augsburg, Institute for Economics. [Downloadable!]
  18. Simon P. Anderson, 2005. "Regulation of Television advertising," Virginia Economics Online Papers 363, University of Virginia, Department of Economics. [Downloadable!]
  19. Stennek, Johan, 2007. "Exclusive Quality - Why Exclusive Distribution May Benefit the TV Viewers," CEPR Discussion Papers 6072, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  20. Mark Armstrong, 2005. "Competition in Two-Sided Markets," Industrial Organization 0505009, EconWPA. [Downloadable!]
    Other versions:
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