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Demand and Supply of Network Television Advertising

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Author Info
Gary W. Bowman
Abstract

In this paper a demand and supply model is constructed for the product (viewers to watch commercial minutes) which the three U.S. commercial television networks sell to advertisers. Estimates of the parameters of the model yielded price elasticities of demand varying from 0.73 to 0.92 but not differing significantly from one. Network audience was found, on the other hand, to be in highly inelastic supply. This suggests that Federal Communications Commission policies which reduce network product -- such as public service requirements, the Prime Time Access Rule, and restrictions on commercial minutes per hour on children's programs -- will have little or no effect on total network revenues.

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File URL: http://links.jstor.org/sici?sici=0361-915X%28197621%297%3A1%3C258%3ADASONT%3E2.0.CO%3B2-5&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 7 (1976)
Issue (Month): 1 (Spring)
Pages: 258-267
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Handle: RePEc:rje:bellje:v:7:y:1976:i:spring:p:258-267

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  1. 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)
  2. Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer, vol. 20(4), pages 323-348, June. [Downloadable!] (restricted)
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