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Price Discrimination and Audience Composition in Advertising-Based Broadcasting

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  • Roberto Roson

Abstract

In this article, a model is introduced that has 2 distinguishing features. First, the multidimensional nature of competition in media markets characterized by free access and advertising is acknowledged, through explicit modeling of vertical and horizontal differentiation. Second, the price of advertising depends on the expected audience composition, not simply on its magnitude, and the amount of price discrimination. It is found that market equilibria depend on a number of critical factors: the amount and type of price discrimination in advertising, the correlation between formats and audience composition, the relative profitability of the different market segments, and diseconomies of scale in program quality. For a variety of market structures, the ability to discriminate on the price of advertising encourages a higher level of quality in broadcast media.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Media Economics.

Volume (Year): 21 (2008)
Issue (Month): 4 ()
Pages: 234-257

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Handle: RePEc:taf:jmedec:v:21:y:2008:i:4:p:234-257

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  1. Roson Roberto, 2005. "Two-Sided Markets: A Tentative Survey," Review of Network Economics, De Gruyter, vol. 4(2), pages 1-19, June.
  2. 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.
  3. Papandrea, Franco, 1997. "Modelling television programming choices," Information Economics and Policy, Elsevier, vol. 9(3), pages 203-218, September.
  4. 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.
  5. 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.
  6. Anthony Dukes, 2004. "The Adverstising Market in a Product Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 327-348, 09.
  7. Bourreau, Marc, 2003. "Mimicking vs. counter-programming strategies for television programs," Information Economics and Policy, Elsevier, vol. 15(1), pages 35-54, March.
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Cited by:
  1. Anna D'Annunzio, 2013. "Vertical Integration in Two-Sided Markets: Exclusive Provision and Program Quality," DIAG Technical Reports 2013-16, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".

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