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Media market concentration, advertising levels, and ad prices

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Author Info

  • Anderson, Simon P.
  • Foros, Øystein
  • Kind, Hans Jarle
  • Peitz, Martin

Abstract

Standard media economics models imply that increased platform competition decreases ad levels and that mergers reduce per-viewer ad prices. The empirical evidence, however, is mixed. We attribute the theoretical predictions to the combined assumptions that there is no advertising congestion and that viewers single-home. Allowing for crowding in viewer attention spans for ads may reverse standard results, as does allowing viewers to multi-home.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 30 (2012)
Issue (Month): 3 ()
Pages: 321-325

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Handle: RePEc:eee:indorg:v:30:y:2012:i:3:p:321-325

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Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords: Media economics; Pricing ads; Advertising clutter; Information congestion; Mergers; Entry;

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References

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  1. Peitz, Martin & Valletti, Tommaso, 2004. "Content and Advertising in the Media: Pay-TV versus Free-To-Air," CEPR Discussion Papers 4771, C.E.P.R. Discussion Papers.
  2. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2005. "Advertising, Competition and Entry in Media Industries," CESifo Working Paper Series 1591, CESifo Group Munich.
  3. GABSZEWICZ, Jean J. & WAUTHY, Xavier Y., 2001. "The option of joint purchase in vertically differentiated markets," CORE Discussion Papers 2001013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Claude Crampes & Carole Haritchabalet & Bruno Jullien, 2009. "ADVERTISING, COMPETITION AND ENTRY IN MEDIA INDUSTRIES -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(1), pages 7-31, 03.
  5. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
  6. Esther Gal-Or & Anthony Dukes, 2006. "On the Profitability of Media Mergers," The Journal of Business, University of Chicago Press, vol. 79(2), pages 489-526, March.
  7. Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
  8. Marc Rysman, 2004. "Competition Between Networks: A�Study of the Market for Yellow�Pages," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 483-512, 04.
  9. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
  10. Brown, Keith & Alexander, Peter J., 2005. "Market structure, viewer welfare, and advertising rates in local broadcast television markets," Economics Letters, Elsevier, vol. 86(3), pages 331-337, March.
  11. Chandra, Ambarish & Collard-Wexler, Allan, 2008. "Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry," MPRA Paper 7954, University Library of Munich, Germany.
  12. Simon P. Anderson & André de Palma, 2006. "Information Congestion," Virginia Economics Online Papers 364, University of Virginia, Department of Economics.
  13. Simon P. Anderson & Oystein Foros & Hans Jarle Kind, 2010. "Hotelling Competition with Multi-Purchasing: Time Magazine, Newsweek, or both?," CESifo Working Paper Series 3096, CESifo Group Munich.
  14. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 483-512.
  15. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle, 2010. "Hotelling competition with multi-purchasing," Discussion Papers 2010/16, Department of Business and Management Science, Norwegian School of Economics.
  16. Przemyslaw Jeziorski, 2010. "Merger enforcement in two-sided markets," Economics Working Paper Archive 570, The Johns Hopkins University,Department of Economics.
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Cited by:
  1. Doh-Shin Jeon & Nikrooz Nasr Esfahani, 2012. "News Aggregators and Competition Among Newspapers in the Internet," Working Papers 12-20, NET Institute.

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