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Demand and Supply of Network Television Advertising

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  • 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.

Suggested Citation

  • Gary W. Bowman, 1976. "Demand and Supply of Network Television Advertising," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 258-267, Spring.
    • Handle: RePEc:rje:bellje:v:7:y:1976:i:spring:p:258-267
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    Cited by:

    1. Kenneth C. Wilbur, 2008. "A Two-Sided, Empirical Model of Television Advertising and Viewing Markets," Marketing Science, INFORMS, vol. 27(3), pages 356-378, 05-06.
    2. Robert Ekelund & George Ford & John Jackson, 1999. "Is Radio Advertising a Distinct Local Market? An Empirical Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(3), pages 239-256, May.
    3. Sylvia Hristakeva & Julie Holland Mortimer, 2023. "Price Dispersion and Legacy Discounts in the National Television Advertising Market," Marketing Science, INFORMS, vol. 42(6), pages 1162-1183, November.
    4. Alvin Silk & Lisa Klein & Ernst Berndt, 2002. "Intermedia Substitutability and Market Demand by National Advertisers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 323-348, June.

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