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Monopoly Provision of Tune-ins

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  • Levent Çelik

Abstract

This paper analyzes a single television station's choice of airing tune-ins (preview advertisements). I consider two consecutive programs located along a unit line. Potential viewers know the earlier program but are uncertain about the later one. The TV station may air a fully informative tune-in during the first program. The cost of the tune-in is the forgone advertising revenue. Under mild conditions, there exists a unique perfect Bayesian equilibrium in which some viewers watch the first program just to see if there is a tune-in or not, and the TV station airs a tune-in unless the two programs are too dissimilar. In the absence of a tune-in, no viewer within the first-period audience keeps watching TV. Full information disclosure never arises. The market outcome is suboptimal; a social planner would air a tune-in for a wider range of programs.

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp362.

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Date of creation: Sep 2008
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Handle: RePEc:cer:papers:wp362

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Keywords: Informative Advertising; Tune-ins; Uncertainty; Information Disclosure.;

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  1. Simon P. Anderson & Regis Renault, 1999. "Pricing, product diversity, and search costs: a Bertrand-Chamberlin-Diamond model," Virginia Economics Online Papers 335, University of Virginia, Department of Economics.
  2. Meurer, Michael & Stahl, Dale II, 1994. "Informative advertising and product match," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 12(1), pages 1-19, March.
  3. Stephen Coate, 2001. "Political Competition with Campaign Contributions and Informative Advertising," NBER Working Papers 8693, National Bureau of Economic Research, Inc.
  4. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Bharat Anand & Ron Shachar, 2009. "Targeted advertising as a signal," Quantitative Marketing and Economics, Springer, Springer, vol. 7(3), pages 237-266, September.
  6. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 92(3), pages 427-50, June.
  7. Ron Shachar & Bharat N. Anand, 1998. "The Effectiveness and Targeting of Television Advertising," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 363-396, 09.
  8. Bharat N. Anand & Ron Shachar, 2011. "Advertising, the matchmaker," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 42(2), pages 205-245, 06.
  9. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
  10. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262200716, December.
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