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Spatial Competition in the Network Television Industry

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  • Goettler, Ronald L
  • Shachar, Ron
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    Abstract

    We present an empirical study of spatial competition and a methodology to estimate demand for products with unobservable characteristics. Using panel data, we estimate a discrete-choice model with latent-product attributes and unobserved heterogeneous consumer preferences. Our application of the methodology to the network television industry yields estimates that are consistent with experts' views. Given our estimates, we compute Nash equilibria of a product location game and find that firms' observed strategies (such as the degree of product differentiation) are generally optimal. Discrepancies between actual and optimal strategies reflect the networks' adherence to "rules of thumb" and, possible, bounded rationality behavior. Copyright 2001 by the RAND Corporation.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal RAND Journal of Economics.

    Volume (Year): 32 (2001)
    Issue (Month): 4 (Winter)
    Pages: 624-56

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    Handle: RePEc:rje:randje:v:32:y:2001:i:4:p:624-56

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    Cited by:
    1. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, American Economic Association, vol. 95(4), pages 1031-1053, September.
    2. Liran Einav (Stanford University), 2004. "Not All Rivals Look Alike: An Empirical Model for Discrete Games with Asymmetric Rivals," Econometric Society 2004 North American Winter Meetings, Econometric Society 626, Econometric Society.
    3. Susan Athey & Guido W. Imbens, 2007. "Discrete Choice Models With Multiple Unobserved Choice Characteristics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1159-1192, November.
    4. C. Lanier Benkard & Patrick Bajari, 2004. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," NBER Working Papers 10278, National Bureau of Economic Research, Inc.
    5. Bajari, Patrick & Benkard, C. Lanier, 2004. "Demand Estimation With Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Research Papers, Stanford University, Graduate School of Business 1842, Stanford University, Graduate School of Business.
    6. Hans Jarle Kind & Tore Nilssen & Lars Sørgard, 2009. "Business Models for Media Firms: Does Competition Matter for How They Raise Revenue?," Marketing Science, INFORMS, INFORMS, vol. 28(6), pages 1112-1128, 11-12.
    7. Nilssen,T. & Sorgard,L., 2001. "The TV industry : advertising and programming," Memorandum, Oslo University, Department of Economics 18/2001, Oslo University, Department of Economics.
    8. Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2004. "Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters," Marketing Science, INFORMS, INFORMS, vol. 23(1), pages 120-133, July.
    9. Anderson, Simon P & Gabszewicz, Jean Jaskold, 2005. "The Media and Advertising: A Tale of Two-Sided Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5223, C.E.P.R. Discussion Papers.
    10. Yong Liu & Daniel Putler & Charles Weinberg, 2006. "The welfare and equity implications of competition in television broadcasting: the role of viewer tastes," Journal of Cultural Economics, Springer, Springer, vol. 30(2), pages 127-140, September.
    11. Massimiliano Landi, 2012. "Single Peakedness and Giffen Demand," Working Papers, Singapore Management University, School of Economics 02-2012, Singapore Management University, School of Economics.
    12. Lindsey, Robin & West, Douglas S., 2003. "Predatory pricing in differentiated products retail markets," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(4), pages 551-592, April.
    13. Steven Berry, 2003. "Comment," Quantitative Marketing and Economics, Springer, Springer, vol. 1(3), pages 285-291, September.
    14. Jiang, Renna & Manchanda, Puneet & Rossi, Peter E., 2009. "Bayesian analysis of random coefficient logit models using aggregate data," Journal of Econometrics, Elsevier, Elsevier, vol. 149(2), pages 136-148, April.

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